Item 1. Business.
The Turner Corporation (the "company") is a holding company that is engaged together with its subsidiaries in general building construction and construction management in the United States and abroad and in real estate investment in the United States. The Turner Corporation establishes general policy direction, coordination and planning, and provides cash management, internal accounting control and other management services for its operating subsidiaries.
Due to economic conditions generally, and to factors specifically affecting the commercial real estate market, beginning in 1989, there was a significant slowdown in commercial construction. In an effort to minimize the effects of this slowdown, during the last several years, the company's construction subsidiaries increased their focus on municipal, institutional, public, justice and amusement (i.e., hospital, university, aviation, aquariums, arenas and similar) projects. Approximately 55% in dollar value of the contracts awarded to the construction subsidiaries in 1993 were in this area.
During 1993, plans were developed to significantly reduce the company's future operating costs and expenses and to improve productivity. This restructuring program principally involves a reduction in the number of staff, plus the consolidation of offices and facilities and the reorganization of support functions. This program will be implemented in 1994 and is expected to be completed in 1995.
During the early 1980's, the company acquired and developed a number of properties. In 1987, the Company decided to discontinue its property development activities and began trying to dispose of the properties it owned.
During 1993, the company sold three real estate properties and a number of condominium units for $23.5 million which was essentially the carrying amount of the properties on the company's books. While the company continues to seek purchasers for its real estate properties, it is unlikely it will be able to dispose of its properties in their entirety until there are more stable market conditions in the areas in which the company's properties are located.
Financial information about the registrant's operations in its construction and real estate segments appear in the consolidated financial statements and in footnote 15 on page 34 in Part II, Item 8 of this report.
At December 31, 1993, The Turner Corporation and subsidiaries employed approximately 2,500 staff employees, of which 1,400 held supervisory positions and 1,100 held non-supervisory positions. Construction Business. The Turner Corporation's construction business is conducted by a number of construction subsidiaries (together, "Turner Construction"). Turner Construction is engaged primarily in the construction of commercial and multi-family residential buildings, manufacturing and research facilities, hospitals, correctional facilities, stadiums and other entertainment facilities, airports and other structures. Also, it has a division which does interior work, such as building-out office space. Turner Construction normally does not build roads, dams, or similar infrastructure elements. Turner Construction primarily acts as a general building contractor or as a construction manager. However, Turner Construction also sometimes acts as a consultant to owners and others.
Although Turner Construction is a nationwide (and to a lesser extent, worldwide) construction firm, Turner Construction attempts to compete locally in major cities of the United States through essentially self-contained regional offices and partially self- contained branch offices. Its effort is to be a major builder in each city or region in which it has an office.
The Turner Corporation's principal construction subsidiary is Turner Construction Company. Universal Construction Co., Inc., The Lathrop Company Inc., and Turner Caribe Inc., wholly-owned subsidiary companies of The Turner Corporation or Turner Construction Company, are also engaged in construction activities in the United States principally in the Southeast, Midwest and Puerto Rico. BFW Construction Co., Inc. was a wholly owned subsidiary of the Company through June 30, 1993 and was engaged in construction activities in the Southwest.
When it acts as a general building contractor, Turner Construction normally undertakes to construct a project and is paid the entire price for the completed project. Most aspects of the construction, however, are performed by subcontractors who are paid by Turner Construction. The functions actually performed by Turner Construction are the planning and scheduling of a construction project, the procurement of materials, the marshalling of the manpower required for the project, the awarding of subcontracts and the direction and management of the construction operation. During 1993, 1992, and 1991 general building contracting activities represented 69%, 78%, and 83% respectively of Turner Construction's value of work completed.
Turner Construction makes extensive use of specialty contractors (such as structural steel contractors, electrical contractors and plumbing contractors) as subcontractors in the performance of its construction contracts. The extent to which work is performed by workmen on its own payroll varies with the location of a particular project and is largely dependent on the availability of experienced subcontractors in a particular area. Work performed by Turner Construction is generally limited to temporary facilities, foundation, concrete, masonry and carpentry work.
In its performance of construction management services, Turner Construction, for a fee, monitors and coordinates the progress of the work done by specialty contractors who are employed directly by the owner to build the project. During 1993, 1992 and 1991 management construction services and consulting represented 31%, 22% and 17%, respectively, of Turner Construction's value of work completed. Construction management contracts involve less risk than do projects in which Turner Construction is a general building contractor. However, the profit from construction management contracts can be substantially less than that which Turner Construction can earn when it acts as a general building contractor.
Construction contracts include lump sum or fixed price contracts, cost-plus fixed fee contracts and variations thereof including cost- plus guaranteed total contracts. The majority of Turner Construction's business involves negotiated contracts. The remainder of its contracts are secured by competitive bidding.
Turner International Industries, Inc. and its subsidiaries were engaged in construction activities during 1993 in the United Kingdom, Kuwait, Taiwan and other foreign countries.
The company is also a partner with Karl Steiner Holding AG ("Steiner") of Switzerland in a joint venture by the name of Turner Steiner International S.A., which renders general building construction and construction consulting services outside Turner Construction's and Steiner's respective home markets.
The United States building construction industry is intensely competitive and Turner Construction Company and the other domestic construction subsidiaries compete with other major contractors as well as with small contractors. Competition in the industry takes on a number of forms, including fee levels, quality of service and degree of risk assumption. Construction companies can expand their operations rapidly and each large population center generally has a number of medium-sized building contractors accustomed to undertaking all but the largest and most complicated projects. Through its organizational structure of permanently established decentralized branch offices and subsidiaries, Turner Construction competes directly with those locally based contractors. Year-to-year operations may be adversely affected by general economic conditions which are unfavorable for business and industry. Exact statistical data is not available for determining the relative size of construction companies, however, based on the contract value of construction contracts received in 1993 and published industry data, Turner Construction believes that it is one of the largest building contractors operating principally within the United States.
A portion of the company's construction activity is performed under payment and performance bonds obtained through bonding capacity from its sureties. Projects requiring surety bonds are usually either publicly funded or private projects, which often require FHA - type mortgage insurance. While the company's sureties limit the amount of new payment and performance bonds available, this limitation did not significantly restrict the company's ability to secure new work. There could be certain circumstances, however, when this limitation could influence the company's selection of prospective projects to pursue.
At December 31, 1993, the anticipated earnings associated with backlog from work to be completed under construction, construction management and construction consulting contracts and under awards believed to be firm but not yet confirmed by signed formal contracts was $91.8 million. The anticipated earnings from work to be completed on contracts and awards at December 31, 1992 was $96.6 million. Approximately 49% of the December 31, 1993 earnings backlog from construction contracts relates to work expected to be performed during 1995 and beyond. The backlog is important to long-range planning and continuity of work for the company's permanent staff. However, anticipated earnings from construction contracts cannot and should not be used as the basis of predictions with respect to future net income.
The anticipated value of work to be completed under construction, construction management and construction consulting contracts and under awards believed to be firm but not yet confirmed by signed formal contracts was $4.66 billion at December 31, 1993. The anticipated value of work to be completed on contracts and awards at December 31, 1992 was $5.09 billion. Approximately 53% of the December 31, 1993 construction backlog is expected to be completed during 1995 and beyond.
Value of construction completed represents the cost of work put in place and materials fabricated during the year and related earnings pursuant to construction and construction management contracts, together with fees and reimbursed expenses from consulting contracts. It is essentially a measure of construction activity during the year rather than "sales" or "revenues" in the sense that those terms are used in other industries.
Because of the varying proportion of construction, construction management and construction consulting work, the impact of inflation on the value of construction completed, changes in anticipated earnings from construction contracts and anticipated value of work completed will not necessarily be correlative.
At December 31, 1993, Turner Construction employed approximately 2,400 staff employees, of whom about 1,320 were executives, project managers, superintendents, engineers, purchasing agents, estimators, senior accountants and other supervisory personnel. In addition, Turner Construction employs foremen and building craftsmen for construction work which has not been subcontracted to specialty contractors. During 1993, approximately 3,300 foremen and building craftsmen were employed at various times.
Real Estate.
The Company's subsidiaries involved in real estate operations are Rickenbacker Holdings, Inc. ("RHI"), and Turner Development Corporation and subsidiaries ("TDC"). Turner Construction also has certain real estate holdings, either directly or through joint venture interests, which are currently being marketed. These holdings relate to residential condominium developments in Boston and Puerto Rico.
From 1980 to 1987, TDC engaged in real estate development in the United States, principally in Florida, Georgia, Illinois, Michigan and Virginia. TDC developed and marketed office buildings and other commercial and residential properties, principally in metropolitan suburban areas.
TDC essentially discontinued new development activity in 1987. It is attempting to sell land parcels previously held for development as well as certain developed projects. At December 31, 1993, TDC owned properties in seven states.
TDC's development projects were financed principally by construction and mortgage loans. TDC is attempting to market projects to institutional and other investors in commercial real estate. In connection with sales of projects, TDC may be required to guarantee levels of occupancy and rentals for limited periods.
Turner Medical Building Services ("TMBS") is engaged in project consulting and development services for ancillary medical and other health care facilities. Its principal clients are hospitals, physician group practice clinics, nursing home and life care sponsors. TMBS provides management of architectural and construction services. TMBS subcontracts the design and construction of its projects.
At December 31, 1993, TDC (including Turner Medical Building Services) had 4 employees, of whom 3 were management, marketing and other supervisory personnel.
RHI owns and leases an air cargo distribution facility located at the Rickenbacker Airport in Columbus, Ohio. It is attempting to market fifteen hundred acres of an adjacent property. It has one principal tenant of the facility whose lease expires in 1996. Unless RHI is able to extend the lease or replace the tenant, its earnings will be adversely affected.
Item 2.


Item 2. Properties.
The Company's executive offices and offices of subsidiary companies are located in leased facilities in commercial office buildings, except for Universal Construction Co., Inc., which owns a small office building in which its offices are located. The company's corporate headquarters and New York branch office are in 100,000 square feet of space which is leased until 2005. Rental expense for this space during 1993 was $2,140,000. Each construction project has temporary field offices.
Turner Construction operates three equipment and storage yards, located in Newark, New Jersey, Cincinnati, Ohio and St. Louis, Missouri for the storage and repair of its construction tools and equipment. Turner Construction owns the Ohio storage and repair yards and leases the New Jersey, and Missouri facilities. Universal Construction Co., Inc., owns a yard, while The Lathrop Company, Inc., leases yards for the storage and repair of construction equipment.
Turner Construction leases major construction equipment such as hoists, cranes and personnel lifts from equipment suppliers for use on particular projects and generally owns only small tools and other miscellaneous equipment; Universal Construction Co., Inc., and The Lathrop Company, Inc. each own construction equipment, earth-moving equipment and small tools.
TDC holds as an investment a wholly-owned apartment complex which it had previously developed, located in Orlando, Florida (200 units). This property is encumbered by a mortgage note payable.
RHI owns certain buildings and air cargo handling equipment at the Rickenbacker Airport in Columbus, Ohio, which collateralize related revenue bonds.
Item 3.
Item 3. Legal Proceedings.
The company is a defendant in various routine litigations incident to its business. While in some instances the amounts sought are very substantial, and certain parties are withholding amounts included in construction receivables pending the outcome of the litigation, in the opinion of management the resolution of such litigation will not have a material adverse effect on the financial position or results of operations of the company.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.
The Turner Corporation common stock is listed on the American Stock Exchange under the symbol TUR.
Quarterly Stock Information _________________________________________ 1993 High Low Close First $11.750 $7.375 $11.50 Second 12.875 11.00 12.50 Third 13.00 9.625 9.875 Fourth 10.50 6.75 7.875 _________________________________________ 1992 High Low Close First $11.875 $6.375 $9.75 Second 10.375 8.375 8.50 Third 9.875 8.00 9.00 Fourth 8.875 6.875 7.25
No dividends were declared or paid in 1993 or 1992. As of March 21, 1994, there were approximately 3,065 record holders of the registrant's common stock.
Item 6.
Item 6. Selected Financial Data The Turner Corporation and Subsidiaries FIVE- YEAR SUMMARY OF FINANCIAL INFORMATION (in thousands, except share amounts)
1993 1992 1991 1990 1989 Value of construction $2,768, $2,644 $2,672, $3,258 $3,561 completed 379 ,794 475 ,325 ,597
Earnings from construction $67,434 $ $ $ $ contracts 73,118 68,672 84,107 83,004 Earnings (losses) from real (8,069 (7,603 (10,712 (30,23 ( (17,87 estate operations ) ) ) 3) d 6) )
Gross earnings $59,365 $ $ $ $ 65,515 57,960 53,874 65,128 Net income (loss) (6,205 ( 4,000 ( 11,342 ( (10,76 2,769 ) a b c 8) ) ) ) Net income (loss) per common (1.55) .50 2.06 (2.41) .54 share - primary Dividends per Series B 2.16 2.16 2.16 2.16 .87 preferred share Dividends per Series C 85.00 38.00 preferred share -- -- -- Dividends per common share 1.00 -- -- .50 1.075 Stockholders' equity $54,683 $ $ $ $ 60,721 46,403 35,755 50,309 Weighted average common 5,186,4 5,074, 4,981,1 4,925, 4,456, shares outstanding - primary 42 943 52 072 240 Total assets $664,20 $ $ $ $ 6 726,55 734,841 782,25 886,47 8 6 6 Notes payable due after one $ 69,545 $ $ $ $ year and convertible 77,635 103,420 78,393 100,96 debenture 7 (a) Includes restructuring charges of $8,500. (b) Includes extraordinary gain of $316 and cumulative effect of accounting change of $1,454. (c) Includes pension curtailment gain of $29,862. (d) Includes write-down of real estate properties of $15,900. Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations 1993 vs. 1992 The company reported a net loss of $6.2 million in 1993 or $1.55 per common share compared to net income of $4.0 million in 1992 or $0.50 per common share. This change is primarily attributable to provisions for restructuring charges in 1993 of $5.6 million and real estate valuation adjustments in 1993 of $4.0 million, both net of tax. Also 1992's net income included a non-recurring extraordinary gain of $.3 million from the extinguishment of debt and a gain of $1.5 million due to the cumulative effect of an accounting change, both net of tax.
Gross earnings declined 9.4 percent from 1992 to $59.4 million primarily due to a decline in construction earnings and an increase in the real estate loss due to the valuation adjustments noted above.
General and administrative expenses also increased 26 percent primarily due to increased interest costs associated with corporate credit facilities and costs incurred in implementing the company's "Total Quality Management" program.
1993's results are more fully described in the discussion that follows.
Construction: Earnings from construction for 1993 were $67.4 million or 7.8 percent less than 1992. Despite a 4.7 percent increase in construction completed, earnings from construction contracts declined, due in part to the continuing soft market and to more intense competition that has put pressure on fees from work secured over the last two years. In addition, provisions were made for certain contract disputes that are expected to be concluded in future periods.
The nature of the company's construction activity has also shifted in recent years, resulting in a significant increase in construction management contracts which represented 25 percent of the value of construction completed in 1993 as opposed to 17 percent in 1992 and 11 percent in 1991. While this type of contract normally involves lower risk than other types of construction contracts it also typically carries lower fees than other types of contracts. Therefore, the increasing frequency of construction management contracts has contributed to the decline in the profitability ratio (construction earnings divided by value of construction completed).
The value of new contracts secured in 1993 was $2.67 billion, down 15 percent from 1992. The reduction in sales is a result of a continuing soft market and more intense competition. The sales increase that had been experienced in 1992 by focusing on selected markets was not repeated in 1993 due to the increased competition in these markets; however, the commercial markets began to rebound in 1993 and the company's penetration in these markets has also improved. In addition, construction management sales in 1993 have declined in favor of more traditional general contracting projects, the effects of which should be reflected in 1994.
According to F.W. Dodge, the company's traditional non-residential building market is expected to increase by approximately 10 percent in 1994 and management believes it is well positioned to take advantage of this growth.
The company's sureties limit the annual amount of new payment and performance bonds available to the company. This limitation did not significantly restrict the company's ability to secure new business in 1993; however, there could be certain circumstances in which it could influence the company's selection of prospective projects.
At the end of 1993 the anticipated earnings associated with backlog from work to be completed under contracts and awards believed to be firm were $91.8 million, down five percent from 1992. The backlog in terms of value of construction to be completed declined 8.5 percent from 1992 to $4.66 billion. The decline in both backlog earnings and construction volume is a reflection of the reduced sales in 1993 and carryover of the reduced fees from contracts secured in 1992. On average, fees on contracts secured in 1993 were slightly higher than fees secured in 1992, which management believes is an indication that the decline in fees is reversing.
Approximately 49 percent of the earnings backlog and 53 percent of the value of construction backlog relates to work to be performed in 1995 and beyond. Estimated earnings from construction backlog cannot and should not be used as a basis for predicting future net income.
Real Estate: Losses from real estate operations increased 6 percent from 1992 to $8.1 million. While operating costs were reduced in 1993 due to the sale of properties, the outsourcing of property management operations, and reduced interest costs, an additional valuation provision of $6.0 million was charged to real estate operations in 1993 as a reserve against asset values in relation to their carrying value.
The company's real estate portfolio is carried at estimated net realizable value or at cost, as applicable. During 1993 the company sold three properties and certain condominium units at their approximate carrying value.
Management believes that the timing of future sales will depend upon achieving reasonable values under more stable market conditions which the company estimates may take up to two years for the developed properties and a more prolonged period for the undeveloped land parcels.
Until conditions in the real estate market improve to the point that will permit the company to conduct real estate transactions, the company will continue to review the asset values of the unsold properties in relation to prospective net realizable value and make adjustments as necessary.
As part of a transaction in 1986 in which the company acquired the development rights to the 1,600-acre Rickenbacker Air Industrial Park, the company entered into a lease, as lessor, for a 100-acre site for a term of 10 years. Under the original term of the lease agreement, the company may continue to experience losses of approximately $.5 million per year, before taxes, primarily due to depreciation charges relating to the facility's buildings and equipment. These losses do not have a significant impact on the company's cash flow. The company is currently negotiating with the tenant to renew the lease when it expires in 1996. Unless the company is able to extend the lease or replace the tenant, expiration of the lease will adversely affect the company's earnings.
Operating and General and Administrative Expenses: Recognizing the ongoing decline in its traditional markets and the reduced profitability from work secured, the company has taken steps to reduce its future expense base. In the fourth quarter the company recorded an $8.5 million ($5.6 million after tax) provision for restructuring. The provision included estimated expenses required to implement the company's plan to consolidate certain support functions company-wide and to scale down operations in shrinking geographic markets. These measures were taken to streamline operations and improve profitability and the company expects that they will begin to benefit financial performance in the later periods of 1994 with the full impact being felt in 1995 and thereafter. The benefits are expected to come from reduced staff and staff support costs.
In total, operating and general and administrative expenses increased 2.3 percent to $59.8 million in 1993 exclusive of the restructuring charge noted above. The majority of the change reflects an increase in interest costs associated with corporate credit facilities, costs incurred in implementing the company's "Total Quality Management" program which was put in place in most of the company's business units in 1993 and an increase in the company's employee benefit expenses.
Operating expenses for construction and real estate operating expenses continued to decline due to the benefit of a full year of cost reduction programs put into effect in prior years.
Other Income: In 1993 the company recorded other losses of $.9 million down from $2.9 million in 1992. The other losses are primarily associated with the investment in Turner Steiner International S.A. (TSI), which resulted in a $3.0 million loss to the company in 1993 compared to a $1.7 million loss in 1992. This foreign investment continues to operate at a loss as it establishes itself in markets in Europe, the Middle East and the Far East. Work has been secured in all three markets and TSI is expected to approach profitability in the latter part of 1994. In 1992 other losses also included an investment in other overseas operations which was sold in 1993. The 1993 losses were partially offset by gains recorded from the company's investments in marketable securities.
Income Taxes: In 1993 the company derived a net tax benefit of 37 percent of the pre- tax loss. In 1992 the provision for income taxes amounted to 44 percent of pre-tax income. The difference is primarily attributable to a minimum state and local tax obligation not associated with operating results.
The company has recorded $16.8 million of deferred tax assets having resulted principally from net operating loss and tax credit carryforwards. Management believes that no valuation allowance is required for these assets due to available tax planning strategies primarily related to the company's pension plan.
Fourth Quarter 1993 Compared to Third Quarter 1993: Results for the fourth quarter of 1993 amounted to a net loss of $9.0 million or $1.83 per common share compared to net income of $.9 million or $0.09 per common share recorded in the third quarter. A significant amount of the fourth quarter results were attributable to the restructuring charge and the real estate valuation charge noted above.
Fourth quarter construction operations reported value of construction completed of $715.1 million and operating income of $5.8 million compared to $735.2 million and $8.2 million, respectively in the third quarter. The decline in fourth quarter performance is attributable to projects winding down in the latter part of the year which have been replaced by new work scheduled to start after the first quarter of 1994.
Exclusive of the valuation charge, real estate operating losses decreased by 33 percent from the third to the fourth quarter. Essentially this improvement was attributable to reduced costs due to the sale of properties. Operating and general and administrative expenses, exclusive of the restructuring charge, increased 7 percent from the third quarter primarily due to the reduction in construction activity noted above which resulted in a reduction in the amount of staff costs chargeable to projects.
In the fourth quarter of 1993 the company recorded a $1.1 million other loss compared to $.4 million of other income recorded in the third quarter. The positive results in the third quarter reflected gains on the sale of marketable securities most of which were recorded in that period. The losses in the fourth quarter were mostly attributable to the TSI results.
1992 Compared to 1991: The company reported net income of $4.0 million in 1992 compared with $11.3 million in 1991. However, the 1991 net income was due entirely to a $29.9 million gain from curtailment of a pension plan. The 1992 results were primarily due to improved performance in both the construction and real estate segments of the company's operations, as well as reductions in operating and overhead expenses. Included in 1992's results was a $1.7 million net loss associated with the investment in Turner Steiner International S.A. which was charged to Other Income.
Construction earnings increased by $4.4 million due to improved earnings on work carried over from prior years. Losses from real estate operations decreased by $3.1 million, primarily due to improved operating results and declining interest rates. Operating and general and administrative expenses decreased by $10.4 million due to the company's continued cost containment efforts which had begun in prior years. In 1992 the company also recorded an extraordinary gain of $.3 million from the extinguishment of debt and a gain of $1.5 million due to the cumulative effect of an accounting change, both net of tax.
Financial Condition: In total, the company recorded a decrease in cash and cash equivalents in 1993 of $12.8 million or 33 percent from 1992, primarily related to the paydown of real estate debt.
Operating activities provided positive cash flows of $8.5 million primarily associated with construction profitability. The charges for restructuring and real estate valuation had no cash impact in 1993. Much of the restructuring charge is expected to be expended in the first two quarters of 1994 and management believes that cash provided from operations, its revolving credit facility and its short-term borrowing capacity will be sufficient to fund the expenditures.
Cash flows provided by investing activities amounted to $5.5 million and were due primarily to the funds received from the sale of real estate properties. The company also invested $6.5 million in a condominium project in Boston which is expected to be substantially sold by the end of 1994. Cash flows used in financing activities amounted to $26.9 million, primarily attributed to the paydown of debt associated with the real estate properties sold.
Management believes the company's cash flows from construction backlog, its $40 million revolving credit facility and amounts available from overnight credit facilities will be sufficient to support the company's operations. Debt maturing in 1994 will be paid from funds generated from operations or will be refinanced prior to its actual maturity date.
Fair Value of Financial Instruments: As described in Note 16 to the financial statements, certain financial instruments have fair values which differ from their carrying amounts. The difference in the values related on Notes payable reflect current favorable interest rates and terms, given the underlying value of the loan collateral.
Inflation: Inflation and changing prices during the current fiscal year have not significantly affected the major markets in which the company conducts its business. Domestically, prices have remained relatively stable. In view of the moderate rate of inflation, its impact on the company's business has not been significant.
Investments in Equity Securities: In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which mandates that debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity. The Statement is effective for fiscal years beginning after December 15, 1993, and is to be initially applied as of the beginning of an enterprise's fiscal year. The company's investment in marketable securities would be classified as available- for-sale. The company will adopt the standard at the beginning of 1994 and management believes that the impact will not be material to the financial statements.
Item 8.

Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page No. Financial Statements: Report of Independent Public Accountants 14 Consolidated Balance Sheets - as of December 31, 1993 and 1992 15 Consolidated Statements of Operations - for the years ended December 31, 1993, 1992 and 1991 16 Consolidated Statements of Stockholders' Equity - for the years ended December 31, 1993, 1992 and 1991 17 Consolidated Statements of Cash Flows - for the years ended December 31, 1993, 1992 and 1991 18 Notes to Consolidated Financial Statements 19-36 Responsibilities for Financial Reporting 37
Schedules Included - for the years ended December 31, 1993, 1992 and 1991: II - Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other than Related Parties. 38-40
IX - Short-Term Borrowings 41
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Turner Corporation:
We have audited the accompanying consolidated balance sheets of The Turner Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1993. These financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As further discussed in Note 4 to the consolidated financial statements, the Company has significant interests in real estate properties which are carried at the lower of cost or estimated net realizable value. The financial statements do not purport to present these real estate interests at their current market value or liquidation value, which may be less than the carrying amounts presented. The Company's management presently intends to hold these real estate interests until they can be sold for prices which they believe reflect reasonable values under more stable market conditions. Management expects to dispose of their interests in the developed properties for those prices generally within the next two years, and to hold the undeveloped land parcels for a longer period of time.
In our opinion, the financial statements referred to above present fairly, in all materials respects, the financial position of The Turner Corporation and Subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note 10 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for postretirement benefits other than pensions. As also discussed in Note 10 to the consolidated financial statements, effective January 1, 1992, the Company changed its method of accounting for amortizing unrecognized pension actuarial gains and losses for the defined benefit pension plan.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to the financial statements are presented for the purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
New York, New York ARTHUR ANDERSEN & CO. March 4, 1994 The Turner Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) As of 1993 1992 Decembe r 31, Assets Cash $25,485 $38,305 and cash equival ents Marketa 13,046 13,613 ble securit ies Constru ction receiva bles: (Note 3) 315,741 341,982 Due on contrac ts includi ng retaina ge 83,135 84,597 Estimat ed unbille d constru ction costs and related earning s Real 117,275 142,348 estate (Note 4) Propert 17,725 21,849 y and equipme nt, net (Note 5) Prepaid 63,207 53,533 pension cost (Note 10) Other 28,592 30,331 assets
Total $664,20 $726,55 assets 6 8 Liabili ties Constru ction account s payable : $239,15 $257,15 Trade 6 4 117,647 129,094 Due on complet ion of contrac ts 78,495 81,160 Accrued estimat ed work complet ed Notes 102,365 133,045 payable and convert ible debentu re (Note 6) Deferre 13,708 18,165 d income taxes (Note 7) Other 58,152 47,219 liabili ties
Total 609,523 665,837 liabili ties Commitm ents and conting encies (Note 13)
Stockho (Note 12) lders' Equity Preferr ed stock, $1 par value (2,000, shares authori zed):
Series C 8 1/2% cumulat ive convert ible (9,000 shares issued and outstan ding; 9 9 $9,000 liquida tion prefere nce)
Series B cumulat ive convert ible (850,00 shares issued; 849,011 849 849 and 849,494 outstan ding) Common stock, $1 par value 5,135 5,071 (20,000 ,000 shares authori zed, 5,134,7 78 and 5,070,5 issued) Paid in 37,280 36,699 capital Cumulat (787) (783) ive foreign transla tion adjustm ent Retaine 24,834 32,869 d earning s 67,320 74,714 Less: (12,105 (13,668 Loan to ) ) Employe e Stock Ownersh ip Plan (Note 11) (532) (325) Treasur y stock, at cost (53,489 and 22,647 common shares)
Total 54,683 60,721 stockho lders' equity Total $664,20 $726,55 liabili 6 8 ties and stockho lders' equity The accompa nying Notes to Consoli dated Financi al Stateme nts are an integra l part of these stateme nts.
The Turner Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share amounts) For the years ended December 31, 1993 1992 1991 Value of construction completed (see $ 2,768, $2,644, $ 2,672, below) 379 794 475 Earnings from construction contracts $67,43 $73,11 $68,67 4 8 2 Losses from real estate operations (see (8,069 (7,603 (10,71 below) ) ) 2) Gross earnings 59,365 65,515 57,960 Operating expenses - construction 40,156 41,160 47,605 Operating expenses - real estate and other 3,053 4,143 6,027 General and administrative expenses 16,555 13,107 15,194 Restructuring charges (Note 2) 8,500 - - Income (loss) from operations (8,899 7,105 (10,86 ) 6) Other income (loss), net (Note 14) (870) (2,903 29,816 ) Income (loss) before income taxes (9,769 4,202 18,950 ) Income tax provision (benefit): (Note 7) Current 252 405 1,226 Deferred (3,816 1,567 6,382 ) Total income tax provision (benefit) (3,564 1,972 7,608 ) Income (loss) before extraordinary gain and cumulative effect of accounting change (6,205 2,230 11,342 ) Extraordinary gain, net of tax (Note 6) - 316 - Cumulative effect of accounting change, - 1,454 - net of tax (Note 10) Net income (loss) $ (6,205 $ 4,000 $ 11,342 ) Primary earnings (loss) per common share: Before extraordinary gain and $ (1.55) $ 0.15 $ 2.06 cumulative effect of accounting change Extraordinary gain - 0.06 - Cumulative effect of accounting - 0.29 - change Net income (loss) per common share $ (1.55) $ 0.50 $ 2.06 Fully diluted earnings (loss) per common share: Before extraordinary gain and (a) $ 0.15 $ 1.80 cumulative effect of accounting change Extraordinary gain - 0.05 - Cumulative effect of accounting - 0.25 - change Net income (loss) per common share (a) $ 0.45 $ 1.80 Weighted average common and common equivalent shares outstanding Primary 5,186, 5,074, 4,981, 442 943 152 Fully diluted (a) 5,924, 5,831, 437 152 Value of construction completed consists 1993 1992 1991 of the following: Revenue from construction contracts: Construction costs incurred by the $ 1,848, $1,993, $ 2,110, company 800 749 379 Company's share of joint venture 160,02 134,28 200,04 construction costs 1 0 1 Earnings from construction contracts (including joint venture earnings of $3,253, $3,785 and $5,129 for 67,434 73,118 68,672 1993, 1992 and 1991, respectively) Total revenue from construction contracts 2,076, 2,201, 2,379, 255 147 092 Construction costs incurred by owners in connection with work under construction management and 692,12 443,64 293,38 similar contracts 4 7 3 Value of construction completed $ 2,768, $2,644, $ 2,672, 379 794 475 Losses from real estate operations consist 1993 1992 1991 of the following: Real estate sales $ 23,537 $ 252 $ 2,574 Cost of sales (23,57 (252) (2,666 1) ) Rental and other income 13,497 15,026 14,513 Direct operating costs (10,05 (14,87 (18,93 4) 9) 1) Depreciation and amortization expense (5,460 (5,930 (6,202 ) ) ) Write-downs and reserves (6,018 (1,820 - ) ) Losses from real estate operations $ (8,069 $(7,603 $ (10,71 ) ) 2) The accompanying Notes to Consolidated (a) Financial Statements are an integral part Antidi of these statements. lutive
The Turner Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands, except share amounts) For the years ended 19 19 19 December 31, 93 92 91 Shares Amount Shares Amount Shares Amount Convertible preferred stock, Series C Balance at beginning of 9,000 $9 -- $-- -- $-- year Preferred stock issued -- -- 9,000 9 -- -- Balance at end of year 9,000 9 9,000 9 -- -- Convertible preferred stock, Series B Balance at beginning of 849,49 849 850,00 850 850,00 850 year 4 0 0 Preferred stock retired (483) -- (506) (1) -- -- Balance at end of year 849,01 849 849,49 849 850,00 850 1 4 0 Common stock Balance at beginning of 5,070, 5,071 4,980, 4,980 4,880, 4,880 year 535 088 311 Common stock issued 64,243 64 90,447 91 99,777 100 Balance at end of year 5,134, 5,135 5,070, 5,071 4,980, 4,980 778 535 088 Paid in capital Balance at beginning of 36,699 26,997 26,202 year Excess of proceeds over par value of Series C preferred -- 8,991 -- stock issued Excess of proceeds over par value of common stock issued 575 695 774 Excess of proceeds over cost of treasury stock 6 16 21 issued Balance at end of year 37,280 36,699 26,997 Cumulative foreign translation adjustment Balance at beginning of (783) (1,088 (1,068 year ) ) Change in cumulative translation adjustments during the year (4) 305 (20) Balance at end of year (787) (783) (1,088 ) Unrealized loss on marketable equity securities Balance at beginning of -- -- (456) year Sale of marketable -- -- 456 equity securities Balance at end of year -- -- -- Retained earnings Balance at beginning of 32,869 30,306 22,494 year Net income (loss) for (6,205 4,000 11,342 the year ) Cash dividends on Series C preferred stock, $85.00, $38.00 per share (765) (342) -- Cash dividends on (1,835 (1,835 (1,836 Series B preferred ) ) ) stock, $2.16 per share Tax benefits on Series 770 740 740 B preferred stock dividends Cash dividends on -- -- (2,434 common stock, $0, $0, ) $.50 per share Balance at end of year 24,834 32,869 30,306 Loan to Employee Stock Ownership Plan (ESOP) Balance at beginning of (13,66 (15,26 (16,74 year 8) 0) 2) Repayment from loan to 1,563 1,592 1,482 ESOP Balance at end of year (12,10 (13,66 (15,26 5) 8) 0) Treasury stock Balance at beginning of 22,647 (325) 25,965 (382) 27,371 (405) year Purchase of treasury 32,900 (240) -- -- 1,500 (22) stock Treasury stock issued (2,058 33 (3,318 57 (2,906 45 ) ) ) Balance at end of year 53,489 (532) 22,647 (325) 25,965 (382) Total stockholders' $54,68 $60,72 $46,40 equity 3 1 3 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
T h e T u r n e r C o r p o r a t i o n a n d S u b s i d i a r i e s C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S ( i n t h o u s a n d s , e x c e p t s h a r e a m o u n t s ) F 1993 1992 1991 o r t h e y e a r s e n d e d D e c e m b e r , C a s h f l o w s f r o m o p e r a t i n g a c t i v i t i e s : Ne ($6,20 $4,000 $11,34 t 5) 2 in co me (l os s) Ad ju st me nt s to re co nc il e ne t in co me (l os s) to ne t ca sh pr ov id ed by op er at in g ac ti vi ti es : R 8,500 - - e s t r u c t u r i n g c h a r g e s W 6,018 1,820 - r i t e- d o w n s a n d r e s e r v e s E - (571) - x t r a o r d i n a r y g a i n C - (2,423 - u ) m u l a t i v e e f f e c t o f a c c o u n t i n g c h a n g e E 3,027 3,928 875 q u i t y i n a f f i l i a t e s ' n e t l o s s D 9,824 11,043 11,450 e p r e c i a t i o n a n d a m o r t i z a t i o n N (9,674 (9,549 (4,824 e ) ) ) t p e r i o d i c p e n s i o n c r e d i t P (3,816 2,536 6,382 r ) o v i s i o n ( b e n e f i t ) f o r d e f e r r e d i n c o m e t a x e s P - - (29,86 e 2) n s i o n c u r t a i l m e n t g a i n C h a n g e s i n o p e r a t i n g a s s e t s a n d l i a b i l i t i e s : De 27,703 23,757 82,180 cr ea se in co ns tr uc ti on re ce iv ab le s De 88 2,253 311 cr ea se in in co me ta xe s re ce iv ab le De (32,11 (25,85 (80,15 cr 0) 7) 2) ea se in co ns tr uc ti on ac co un ts pa ya bl e De 5,142 (8,986 9,216 cr ) ea se (i nc re as e) in ot he r as se ts an d li ab il it ie s, ne t 8,497 1,951 6,918 Ne t ca sh pr ov id ed by op er at in g ac ti vi ti es C a s h f l o w s f r o m i n v e s t i n g a c t i v i t i e s : (25,91 (13,61 - Pu 3) 3) rc ha se s of ma rk et ab le se cu ri ti es 26,480 - - Pr oc ee ds fr om sa le of ma rk et ab le se cu ri ti es (8,137 (3,180 - In ) ) ve st me nt s in jo in t ve nt ur es (4,610 (4,373 (14,11 Pu ) ) 1) rc ha se s of pr op er ty an d eq ui pm en t 4,162 591 480 Pr oc ee ds fr om sa le of pr op er ty an d eq ui pm en t - - 1,058 Pr oc ee ds fr om sa le of in ve st me nt s 17,465 - 2,342 Pr oc ee ds fr om sa le of re al es ta te , ne t (3,911 (2,468 (875) In ) ) cr ea se in re al es ta te 5,536 (23,04 (11,10 Ne 3) 6) t ca sh pr ov id ed by (u se d in ) in ve st in g ac ti vi ti es C a s h f l o w s f r o m f i n a n c i n g a c t i v i t i e s : 639 786 874 Co mm on st oc k is su ed - 15,000 - Co nv er ti bl e pr ef er re d st oc k is su ed - - (2,434 Ca ) sh di vi de nd s to co mm on st oc kh ol de rs (2,600 (2,177 (1,836 Ca ) ) ) sh di vi de nd s to pr ef er re d st oc kh ol de rs 1,563 1,592 1,482 Re pa ym en ts fr om lo an to ES OP 62,963 42,386 10,852 Pr oc ee ds fr om bo rr ow in gs (89,21 (34,32 (9,665 Pa 7) 1) ) ym en ts on bo rr ow in gs - (1,201 - Ca ) sh us ed fo r de bt re st ru ct ur in g - (5,034 - Fu ) nd in g of jo in t ve nt ur e bo rr ow in gs 39 73 66 Pr oc ee ds fr om is su an ce of tr ea su ry st oc k (240) - (22) Pu rc ha se of tr ea su ry st oc k (26,85 17,104 (683) Ne 3) t ca sh pr ov id ed by (u se d in ) fi na nc in g ac ti vi ti es
Ne (12,82 (3,988 (4,871 t 0) ) ) de cr ea se in ca sh an d ca sh eq ui va le nt s Ca 38,305 42,293 47,164 sh an d ca sh eq ui va le nt s at be gi nn in g of ye ar Ca $25,48 $38,30 $42,29 sh 5 5 3 an d ca sh eq ui va le nt s at en d of ye ar No nc as h fi na nc in g ac ti vi ti es :
Mo rt ga ge no te as su me d by th e bu ye r in co nn ec ti on w $4,426 $ $ - i - t h t h e s a l e o f r e a l e s t a t e - 6,000 - Se ri es D co nv er ti bl e pr ef er re d st oc k ex ch an ge d fo r a co nv er ti bl e de be nt ur e - 2,500 - No te pa ya bl e fo rg iv en re la te d to th e ai r in du st ri al pa rk No nc as h in ve st in g ac ti vi ti es :
No te pr ov id ed up on th e sa le of ce rt ai n a 1,577 - - s s e t s a n d l i a b i l i t i e s o f a c o n s t r u c t i o n s u b s i d i a r y 1,185 - - No te s pr ov id ed up on th e sa le of re al es ta te Th e ac co mp an yi ng No te s to Co ns ol id at ed Fi na nc ia l St at em en ts ar e an in te gr al pa rt of th es e st at em en ts .
THE TURNER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share amounts)
1. Summary of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of The Turner Corporation and Subsidiaries and their proportionate interest in the accounts of construction joint ventures (the company). The company also has investments in affiliates and in real estate joint ventures, which are accounted for under the equity or cost method, as appropriate. All significant intercompany transactions and balances are eliminated. Certain prior year balances have been reclassified in the consolidated financial statements in order to provide a presentation consistent with the current year.
Construction Operations: The company determines construction earnings under the percentage of completion method. Under this method, the company recognizes as earnings that portion of the total earnings anticipated from a contract which the value of the work completed bears to the estimated total value of the work covered by the contract. As the company's construction contracts generally extend over more than one year, revisions in costs and earnings estimates during the course of the work are reflected in the year in which the facts which require the revision become known. When a loss is forecasted for a contract, the full amount of the anticipated loss is recognized in the period in which it is determined that a loss will occur. Claims are included in earnings from construction contracts at an amount based on the related contract costs when realization is probable and the amount can be reliably estimated.
The company continuously reviews estimated earnings from construction contracts and makes necessary adjustments based on current evaluations of the indicated outcome. In 1993 and 1992, the company wrote down certain construction receivables and claims deemed unrecoverable.
Under certain contracts, owners of buildings make payments directly to suppliers and subcontractors for all or for portions of work covered by the contract. The company considers such costs in determining contract percentage of completion and reports such amounts in the value of construction completed.
Real Estate Operations: Rental income, including fixed minimum rents and additional rents, under operating leases with tenants is generally recognized on a contractual basis.
Profit on sales of real estate is recognized in full when the profit is determinable, an adequate down payment has been received, collectability of the sales price is reasonably assured and the earnings process is substantially complete. If the sales transaction does not meet these criteria, all profit or a portion thereof is deferred until such criteria are met.
The real estate properties which are held for investment are carried at cost less accumulated depreciation and are assessed periodically for impairment based on the sum of undiscounted future cash flows. All other real estate properties and investments in real estate joint ventures are carried at the lower of cost or estimated net realizable value (Note 4).
Depreciation and Amortization: The company calculates depreciation on property and equipment, and on real estate primarily on the straight- line method. Estimated useful lives are as follows: buildings and improvements, 20-40 years; office machines and furniture, 5-10 years; and equipment, 10 years. Leasehold improvements (the company as lessee) to property used in company operations are amortized on a straight-line basis over the term of the lease. Tenant improvements (the company as lessor) on real estate properties are amortized on a straight-line basis over the term of the lease. Maintenance and repairs are expensed currently, except that expenditures for betterments are capitalized.
Cash Equivalents: The company considers all investments purchased with maturities of 90 days or less to be cash equivalents.
Marketable Securities: Marketable securities are carried at the lower of cost or market. Unrealized losses on marketable securities, held for short term investment, are charged to expense.
In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which mandates that debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity. SFAS No. 115 is effective for fiscal years beginning after December 15, 1993, and is to be initially applied as of the beginning of an enterprise's fiscal year. The company's investments in marketable securities would be classified as available- for-sale. The company will adopt the standard at the beginning of 1994 and management believes that the impact will not be material to the financial statements.
Income Taxes: Prior to January 1, 1993, deferred income tax expenses or credits were recorded to reflect the tax consequences of timing differences between the recording of income and expenses for financial reporting purposes and for purposes of filing income tax returns in effect when the difference arose.
Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The adoption of the standard effective January 1, 1993 was not material to the consolidated financial statements.
The company does not provide for U.S. Federal income taxes on undistributed earnings of foreign subsidiaries since it is the company's intention to permanently reinvest those earnings outside the United States.
Foreign Currency Translation: Assets and liabilities of operations that represent an investment in a foreign country are translated into U.S. dollars at exchange rates in effect at year-end, while revenues and expenses are translated at average exchange rates prevailing during the year. The resulting translation gains and losses are accumulated as a separate component of stockholders' equity. Foreign exchange transaction gains and losses are included in results of operations during the periods in which they arise.
Earnings Per Common Share: Primary earnings per common share is based on net income less preferred stock dividends (net of tax benefits relating to Series B preferred stock) divided by the weighted average number of common and common equivalent shares outstanding. Fully diluted earnings per common share is further adjusted to reflect the assumed conversion of convertible preferred stock and the convertible debenture, and the elimination of the preferred stock dividends and interest expense on the convertible debenture, net of applicable income taxes, if such conversions are dilutive. 2. Restructuring Charges During 1993, plans were developed to significantly reduce the company's future operating costs and expenses and to improve productivity. This restructuring program principally involves a reduction in the number of staff, plus the consolidation of offices and facilities and the reorganization of support functions. This program will be implemented in 1994 and is expected to be completed in 1995. The results of operations for 1993 include $8,500 of pretax charges ($5,600 net of tax benefits, or $1.08 per share) relating to this program. The charges include provisions for severance pay, incentive programs relating to employee terminations, lease terminations and other reorganization costs. The restructuring charge is expected to be substantially expended in the first two quarters of 1994 and management believes that cash provided from operations, its revolving credit facility and its short-term borrowing capacity will be sufficient to fund the expenditures.
3. Construction Receivables Due on contracts included $106,665 of retainage at December 31, 1993. It is expected that approximately 85% of such retention will be collected by December 31, 1994. At December 31, 1992, retainage was $115,911. Construction receivables include estimated net claims. The settlement of the claims depends on individual circumstances, accordingly, the timing of the collection will vary and may extend beyond one year. Those claims, primarily due to owner-caused delays, incomplete specifications, or similar reasons, amounted to $10,800 and $7,300 at December 31, 1993 and 1992, respectively.
4. Real Estate The company owns a portfolio of real estate, either directly or through joint venture interests, that includes commercial office properties, mixed-use warehouse/service properties, residential properties, undeveloped land, and certain buildings and hangars located at an air industrial park. The properties are located throughout the United States, but primarily in the Southeast and Great Lakes regions. Accumulated depreciation at December 31, 1993 and 1992 was $32,710 and $31,050, respectively.
Given the current real estate market, the company has determined that its interests in commercial office, mixed-use and residential condominium properties, and undeveloped land parcels will be available for sale when they can be sold for prices which the company believes reflect the reasonable value of the properties under more stable market conditions. Management expects to dispose of its interests in commercial office, mixed-use and residential condominium properties for those prices generally within the next two years. Given the current market for undeveloped land parcels, management anticipates a prolonged period before land values recover. Due to the relatively low holding costs of the company's undeveloped land parcels, the company intends to and has the ability to hold the properties for a longer period of time in order to achieve more reasonable prices upon disposition. The carrying amounts of the company's interests in these developed properties were $55,609 and $54,102, and in the undeveloped land parcels were $30,498 and $30,964 at December 31, 1993 and 1992, respectively. These real estate interests are carried at the lower of cost or estimated net realizable value. The net realizable values reflect the company's estimates of the net sales proceeds less anticipated capital expenditures through the estimated date of sale and disposal costs, which have not been discounted to net present value.
The company estimates the net realizable values by evaluating and making assumptions about future events with respect to the property, market conditions and anticipated investor rates of return. The net realizable values reflect each disposition based on the company's current intended holding period, and do not represent liquidation values. Judgements regarding future events are not subject to precise quantification or verification and may change from time to time as economic and market factors, and the company's evaluation of them change, and the effects of such changes may be significant.
The company actively monitors market conditions and reviews, on a quarterly basis, the net realizable values of its real estate interests and reduces carrying amounts when required. On a periodic basis, generally not exceeding two to three years, the company has independent appraisals performed for significant real estate interests for the purpose of assisting management in determining their current value and the appropriate timing of disposition. In connection with the company's review of the carrying amounts of its real estate interests, additional write-downs and reserves of $6,018 and $1,820 were recorded for the years ended December 31, 1993 and 1992, respectively.
5. Property and Equipment Property and equipment as of December 31, 1993 and 1992 consisted of:
1993 1992 Buildi $12,63 $13,43 ngs 3 2 and improv ements Office 16,610 17,104 machin es and furnit ure Equipm 16,508 20,547 ent Total 45,751 51,083 Less: accumu lated deprec iation (28,02 (29,23 and 6) 4) amorti zation Net $17,72 $21,84 5 9
6. Notes Payable and Convertible Debenture Notes payable and convertible debenture as of December 31, 1993 and 1992 consisted of the following:
1993 1992 Land $31,87 $39,66 and 7 5 buildi ng mortga ges Revenu 20,500 38,135 e bonds Employ 12,800 14,300 ee Stock Owners hip Plan Revolv 24,000 19,000 ing credit facili ty Conver 6,000 6,000 tible debent ure Collat - 5,500 erized credit facili ty Other 7,188 10,445 Total $102,3 $133,0 65 45
Land and Building Mortgages: Variable rate mortgages bear interest at rates ranging from prime to prime plus 1 percent and mature in varying installments through 1998. The weighted average interest rate for 1993 and 1992 was approximately 6.64% and 6.87%, respectively. Fixed rate mortgages bear interest at 9.375% and are due in varying installments through 2001.
Revenue Bonds: Adjustable rate revenue refunding bonds collateralized by properties at the air industrial park mature in varying installments through 2010. The bonds bear interest at a weekly variable rate. The weighted average interest rate for 1993 and 1992 was approximately 2.46% and 2.83%, respectively. The bonds are supported by a letter of credit for which the company pays 1.50% per annum. The company entered into an interest rate swap agreement with a bank for a $15,000 notional amount providing for a fixed interest rate of 4.13% through December 15, 1996.
Multi-family facility revenue bonds collateralized by a residential property were retired in 1993 upon disposition of the property. The bonds bore interest at a weekly variable rate. The weighted average interest rate for 1993 and 1992 was approximately 3.32% and 5.81%, respectively.
Extinguishment of Debt: In December 1992, the company restructured certain debt relating to the air industrial park. The previously outstanding revenue bonds, which carried a fixed interest rate of 8.75% were redeemed at 102% of par value. In addition, $2,500 of other debt was forgiven. Proceeds for the redemption were primarily provided by a series of adjustable rate revenue refunding bonds issued in November 1992. The transaction resulted in a net extraordinary gain of $316.
Employee Stock Ownership Plan (ESOP): This loan was used to fund the company's loan to the ESOP and is payable in varying installments through 1999. Interest is payable quarterly at a variable rate equal to 83% of the prime rate or a percentage of LIBOR, at the company's option. The loan is collateralized by first mortgages on certain real estate properties and letters of credit. The loan allows for collateral substitution and upon disposition of such properties may require additional collateral to maintain loan-to-value relationships. The weighted average interest rate for 1993 and 1992 was approximately 3.44% and 4.20%, respectively. The loan agreement contains various covenants, including the maintenance of a minimum amount of stockholders' equity and debt coverage ratio. At December 31, 1993, the minimum stockholders' equity required was $50,000 and increases by $4,000 annually to $74,000 in 1999.
Revolving Credit Facility: The company has an unsecured revolving credit facility totaling $40,000, the proceeds of which are being used for general corporate purposes, which expires in 1996. The current facility permits the company to choose between various interest rate options. The weighted average interest rate for 1993 and 1992 was approximately 5.97% and 5.49%, respectively. The company pays a commitment fee at an annual rate of 1/2 of 1% on the unused portion of the facility. The facility contains various covenants, the most restrictive of which is a fixed-charge coverage requirement.
Convertible Debenture: In July 1992, the company issued a $6,000 8.5% convertible debenture which matures in 1997. The company may not prepay the principal balance prior to its maturity. At the option of the holder, the debenture is convertible into 6,000 shares of Series D 8 1/2 percent convertible preferred stock of the company. The holder must convert the full debenture principal balance at the time of conversion. The Series D stock is ultimately convertible into 600,000 shares of the company's common stock and carries terms similar to the Series C stock of the company, except as to the election of directors (Note 12).
Collateralized Credit Facility: The facility was collateralized by mortgages on real estate and matured in 1993. The facility bore interest at prime plus 1% or LIBOR plus 2.5%, at the company's election. The weighted average interest rate for 1993 and 1992 was approximately 5.70% and 6.34%, respectively.
Other: This amount includes a bank loan for the purpose of financing improvements to the company's offices which had an outstanding balance of $5,000 and $8,000 at December 31, 1993 and 1992, respectively. The principal is payable in semi-annual installments through 1995. The loan bears interest at LIBOR plus 0.25%. The weighted average interest rate for 1993 and 1992, including associated letter of credit fees, was approximately 4.85% and 5.47%, respectively.
The company maintains overnight credit facilities with various banks at varying rates. The company had available $18,000, of which no amounts were outstanding at December 31, 1993. The facilities are subject to periodic renewal from the banks and certain facilities carry annual commitment fees ranging from .375% to 1%.
Aggregate maturities of notes due are as follows:
1994 1995 1996 1997 1998 Therea fter $32,82 $21,76 $3,108 $9,449 $12,25 $22,97 0 2 0 6
Under the terms of the revolving credit facility, the company is annually required to pay down the facility for five consecutive days. Accordingly, any borrowings as of the end of the year are reflected as due within one year in the above maturity table.
Interest cost, which approximates amounts paid, for the years ended December 31, 1993, 1992 and 1991 was $7,427, $8,124 and $9,872, respectively.
At December 31, 1993, $87,029 of real estate was pledged as collateral for notes payable.
7. Income Taxes The components of the income tax provision (benefit) are as follows:
1993 1992 1991 Curren t: Federa $ $ $ - l ----- ----- ---- Foreig 145 196 144 n State 107 464 1,082 & Local 252 660 1,226 Deferr ed: Federa (4,027 2,099 5,990 l ) State 211 437 392 & Local (3,816 2,536 6,382 )
Total ($3,56 $3,196 $7,608 4)
The income tax provision (benefit) above consists of the following components:
1993 1992 1991 Operat ($3,56 $1,972 $7,608 ions 4) Extrao - 255 - rdinar y gain Accoun - 969 - ting change ($3,56 $3,196 $7,608 4)
In the Statement of Operations for the year ended December 31, 1992, the extraordinary gain and the cumulative effect of the accounting change are shown net of the related tax provision.
Deferred income taxes result from temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The source of these differences and tax effect of each at December 31, 1993 and for the years ended December 31, 1992 and 1991 are as follows:
Deferr Provis ed ion Income (Benef Tax it) for Liabil Deferr ity ed (Asset Income ) Taxes 1993 1992 1991 Constr $556 ($314) ($2,41 uction 0) earnin gs Pensio 24,287 4,216 12,243 n plans Deprec 5,572 (156) 475 iation Real (2,362 159 350 estate ) proper ties Net (7,375 (1,886 (4,752 operat ) ) ) ing loss benefi ts Restru (2,890 - - cturin ) g charge s Altern (2,451) - - ative minimu m tax credit carryf orward Jobs (75) - - credit carryf orward Deferr (787) (100) (484) ed compen sation plan Contri (848) (231) (269) bution s carryo ver Other 81 848 1,229 $13,70 $2,536 $6,382
The company has recorded $16,788 of deferred tax assets having resulted principally from net operating loss and tax credit carryforwards. Management believes that no valuation allowance is required for those assets due to available tax planning strategies related to the company's defined benefit pension plan and dispositions of real estate assets.
A comparison of the Federal statutory rate with the company's effective tax rate is as follows:
1993 1992 1991 Statut (34.0)% 34.0% 34.0% ory Federa l income tax rate (benef it) State 2.2 8.3 5.1 and local taxes, net of Federa l benefi t Effect (1.6) 0.7 0.5 ive foreig n tax rate U.S. (1.4) -- -- posses sion tax credit Other (1.7) 1.4 0.5 Effect (36.5) 44.4% 40.1% ive % tax rate (benef it)
Income taxes paid (refunded) were $73, $(3,397) and $(3,495) for 1993, 1992, and 1991, respectively.
For Federal income tax purposes, the company has available at December 31, 1993 a net operating loss carryforward of $19,551 which is available to offset future taxable income and expires from 2004 through 2007, and an alternative minimum tax credit carryforward of $2,451 which can be carried forward indefinitely.
The unrecognized deferred tax liability related to cumulative undistributed earnings of foreign subsidiaries which were permanently reinvested was $227 at December 31, 1993.
8. Incentive Compensation Plans The company sponsors two incentive compensation plans. The Executive Incentive Compensation Plan (EICP) authorizes payments of awards to executive officers and other designated employees of the company in the form of cash and common stock of the company, which may be deferred in part at the election of the recipient. The committee that administers the plan determines the particular recipients who are to receive awards and the amounts of their respective awards. The amounts charged (credited) to expense in 1993, 1992 and 1991 aggregated $39, $1,092 and $(242), respectively.
The staff Incentive Compensation Plan (ICP) authorizes payment of awards in the form of cash and common stock of the company to certain salaried employees who are not participants in the company's EICP. All awards are deferred for a period of five years and are paid out in cash and common stock over a six-year period thereafter. Recipients must remain in the continuous employment of the company up to the distribution date in order to receive the award. The amounts charged to expense in 1993, 1992 and 1991 aggregated $116, $78, and $62, respectively.
9. Stock Options The company has incentive stock option plans adopted in 1986 and 1992 which provide for the granting of options to officers and designated employees of the company to purchase shares of the common stock of the company at a price not less than the market value of the common stock on the date the option is granted. In addition, an incentive plan adopted in 1981 has been terminated and no new options can be granted under this plan, although unexercised options remain outstanding.
Options are exercisable in whole or in part from one to ten years from the date of the grant at the discretion of the stock option committee. Options granted under each plan may not exceed 400,000 shares. No charges to income arise in connection with the plans.
Option plan transactions during 1993 and 1992 are summarized in the following table:
Price Range 1993 1992 Per Share Outsta 645,32 579,38 $8.44 nding 8 8 - $ Januar 27.50 y 1
Grante 135,50 97,500 8.00 d 0 - 12.50 Exerci (800) - 8.50 sed Cancel (20,24 (31,56 8.00 ed 0) 0) - 25.50
Outsta 759,78 645,32 8.00 nding 8 8 - Decemb 27.50 er 31
Exerci 636,56 633,94 8.44 sable 8 9 - at 27.50 Decemb er 31
Option 405,29 83,230 s 0 availa ble for grant at Januar y 1
Option 277,53 405,29 s 0 0 availa ble for grant at Decemb er 31
10. Employee Benefit Plans The company has a noncontributory defined benefit pension plan which covers salaried employees who meet minimum age and length of service requirements. Benefits are based on members' years of service and averaged final salary.
The projected unit credit actuarial method is used to determine the recognition of net periodic pension expense and to determine funding requirements. The company will continue to fund the plan as required.
Plan assets consist primarily of pooled equity, debt and short-term investment funds, a pooled real estate equity fund and 675,000 shares of the company's common stock.
On March 31, 1991, the company curtailed its defined benefit pension plan such that benefits do not accrue to plan participants for future years of service. The curtailment resulted in a pre-tax gain of $29,862 which is included in Other income, net for the year ended December 31, 1991.
Effective January 1, 1992, the company changed the method for amortizing unrecognized pension actuarial gains and losses for the defined benefit pension plan, under which the full amount of the net actuarial gain or loss in the year is being amortized over a period not exceeding the average life expectancy of employees. The effect of the change in accounting method for the year ended December 31, 1992 related to the 1992 pension expense was to increase net income by $641, net of tax, or $.12 per share on primary earnings per share and $.10 per share on fully diluted earnings per share. The cumulative effect of the change on prior years was to increase net income by $1,454, net of tax, or $.29 per share on primary earnings per share and $.25 per share on fully diluted earnings per share.
The pro forma amounts below have been adjusted for the effect of retroactive application of the change in accounting method as if the change had been adopted effective January 1, 1991.
For the years ended Decemb er 31, 1992 1991 Income before extrao rdinar y
gain and cumula tive $2,230 $11,504 effect of accoun ting change Primar y earnin gs per $ $ common .15 2.09 share Fully dilute d earnin gs per $ $ common .15 1.83 share Net $2,546 $12,796 income Primar y earnin gs per $ $ common .21 2.39 share Fully dilute d earnin gs per $ $ common .20 2.05 share
The table below sets forth the funded status of the defined benefit pension plan and amounts recognized in the company's financial statements at December 31, 1993 and 1992 and for the years then ended:
1993 1992 Actuar ial presen t value of benefi t
obliga tions: $81,84 $80,06 Vested 3 3 benefi ts 86,670 85,341 Accumu lated benefi t obliga tion 86,670 85,341 Projec ted benefi t obliga tion Plan 163,09 153,33 assets 9 0 at fair value
Plan assets in excess of projec ted 76,429 67,989 benefi t obliga tion Unreco 1,825 2,003 gnized prior servic e cost Unreco (9,763 (10,29 gnized ) 4) net gain Remain ing unreco gnized net asset (5,284 (6,165 being ) ) recogn ized over years
Prepai 63,207 53,533 d pensio n cost
Compon ents of net period ic pensio n
credit :
Intere st cost on projec ted benefi t 6,829 6,725 obliga tion (15,64 (12,02 Actual 6) 2) return on plan assets Net (857) (4,252 amorti ) zation and deferr al
Net ($9,67 ($9,54 period 4) 9) ic pensio n credit
The assumptions used in measuring the actuarial value of projected benefit obligations and determining the net periodic pension credit were:
1993 1992 Weight 8.25% 8.25% ed averag e discou nt rate Rate N/A N/A of compen sation increa se Expect ed long- term rate of return on 10.0% 10.0% plan assets
The company amortizes unrecognized prior service costs on a straight- line basis over a period not exceeding the average life expectancy of retirees.
Effective January 1, 1994, the company formed a cash balance plan to provide pension benefits to its employees, that were previously provided separately under the curtailed defined benefit pension plan and the defined contribution retirement plan. Management anticipates that the cash balance plan will significantly reduce the net periodic pension credit recognized in 1994 and future years, and result in a reduction of the prepaid pension asset.
The company also sponsors a defined contribution retirement plan, effective April 1, 1991, and a Section 401(k) tax deferred savings plan which covers salaried employees who meet minimum age and length of service requirements. Contributions to the defined contribution retirement plan are based on salaries and length of service. Matching contributions which began July 1, 1991, to the Section 401(k) plan are based on employee contributions and are limited to one-half of the first 3% of the employee's compensation. The aggregate amount charged to expense for these plans was $6,933 and $7,542 in 1993 and 1992, respectively.
Employees retiring from the company and eligible for an immediate benefit from the retirement plans (generally age 55 with 15 years of service) are eligible to continue their current medical insurance coverage into retirement. The medical benefits continue to be subject to the deductibles, copayment provisions and other limitations. Retirees pay for a portion of the total cost of their medical insurance and starting with 1993 retirements, the portion of the total cost will be dependent on the individual's total company service at retirement. The medical plans of the company are funded on a pay as you go basis.
Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." The statement mandates accrual of postretirement health benefits during the years that employees render service.
The company will amortize to expense, over a 20-year period, the discounted present value of the obligation as of the adoption date. The table below sets forth the funded status of the plans and the amounts recognized in the company's financial statements at December 31, 1993 and for the year then ended.
_________________________________________________________________ Actuarial present value of accumulated postretirement benefit obligation:
Retirees $16,162 Fully eligible active plan participants 1,371 Other active plan participants 4,788 Accumulated unfunded postretirement benefit obligation 22,321 Remaining unrecognized transition obligation (18,820) Unrecognized net loss (1,744) Accrued postretirement benefit obligation $1,757 _________________________________________________________________ Net periodic postretirement benefit cost includes the following components: Service cost $286 Interest cost 1,612 Amortization of unrecognized transition obligation 991 _________________________________________________________________ Net periodic postretirement benefit cost $2,889 _________________________________________________________________ Impact of one percent increase in healthcare trend rate: Aggregate impact on 1993 service cost and interest cost $120
Increase in December 31, 1993 accumulated postretirement benefit obligation $1,619 _________________________________________________________________
The accumulated postretirement benefit obligation was computed using an assumed weighted average discount rate of 7.5%. The healthcare cost trend rate was assumed to be 13% in 1993 decreasing by 1% a year to 6% in 2000 and 5.5% in 2001 and beyond.
In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits." This statement mandates the accrual of all types of postemployment benefits provided to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. The company will adopt this standard effective January 1, 1994. Management believes the impact when the standard is adopted will not be material to the consolidated financial statements.
11. Employee Stock Ownership Plan The company has a leveraged Employee Stock Ownership Plan (ESOP) for salaried employees who meet minimum age and length of service requirements. To fund the ESOP, the company originally borrowed $18,092. Proceeds of this borrowing were loaned to the ESOP, which purchased 850,000 shares of Series B convertible preferred stock.
Eligible employees are allocated the Series B stock over the term of the ten-year ESOP loan. The allocated shares vest after five years of service. The Series B stock is callable, in whole or in part, at the option of the company at any time after July 1, 1994, at a price per share expressed as a percentage of the issue price of $21.29. At the company's option, the call may be satisfied by common shares, cash or a combination thereof. The call price is 112% in 1994 and decreases to 100% in 1999 and for years thereafter. The trustee may, at any time, convert each share of Series B stock into one share of common stock.
Prior to the retirement of the ESOP debt, employees can only redeem their vested preferred shares upon death or age 70 1/2. Once the debt is retired, shares can be redeemed at retirement, termination or death. The redemption value is established at the end of each year by an independent appraiser. The latest appraised value dated March 17, 1994 was $18.00 per preferred share. At the company's option, redemption by an employee may be satisfied by common shares, cash or a combination thereof.
The preferred stockholders are entitled to identical voting rights as the holders of common shares.
The loan to the ESOP is on the same terms as the company's bank loan. The ESOP will repay the loan (plus interest) with proceeds from the quarterly dividends paid on the Series B stock and contributions from the company. All contributions to the ESOP in excess of dividends are treated as compensation expense.
Compensation expense and interest income for the years ended December 31, 1993, 1992 and 1991 were:
1993 1992 1991 Compen $340 $215 $585 sation expens e Intere $509 $627 $1,018 st income
The interest income earned by the company on the ESOP loan offsets the interest expense incurred on the original borrowing, with no impact on the results of operations.
12. Stockholders' Equity On July 20, 1992, the company sold Karl Steiner Holding AG (Steiner) 9,000 shares of Series C 8 1/2 percent convertible preferred stock and 6,000 shares of Series D 8 1/2 percent convertible preferred stock for a total of $15,000. On July 22, 1992, the Series D stock was exchanged for an 8 1/2 percent convertible debenture due 1997 in the principal amount of $6,000 (Note 6).
The Series C stock is convertible into 1,000,000 shares of common stock or can be exchanged for 9,000 shares of Series E 8 1/2 percent convertible preferred stock (which is substantially identical to the Series C stock, except as to transferability and election of directors). The debenture is convertible into 6,000 shares of Series D stock, which is convertible into 600,000 shares of common stock. The Series C stock has, and the Series D and Series E stock will have, a liquidation preference of $1,000 per share and a cumulative dividend preference of $85 per share per year. At their option, the holders of the Series C, Series D and Series E stock will have the right to convert either the full amount or a partial percentage into common stock.
While the Series C stockholders own securities constituting (on an after-converted basis) more than 10 percent of the company's outstanding common stock, on a fully diluted basis, the Series C stockholders have the right to elect, as a class, between one and three directors, depending on the percentage of the outstanding stock owned. Holders of Series D and Series E stock, and Series C stock (except when they are entitled to elect at least one director as a class), vote on an as-converted basis as though they held common stock. Holders of Series C or Series D stock also have the right to elect a director if the company is six quarters or more in arrears in paying dividends.
In connection with the purchase of the company's securities by Steiner, the company executed an agreement which provided the company and Steiner with certain rights, obligations and options which terminates on June 30, 2002, unless extended.
Under this agreement, Steiner has the right of first refusal in some instances with regard to sales by the company of more than five percent of its stock. In addition, if the company issues additional stock or convertible or exchangeable securities, Steiner will have the option in some instances to purchase similar securities to the extent necessary to maintain its percentage ownership.
If the company issues, in a transaction or related series of transactions, common stock or convertible or exchangeable securities totaling at least 15 percent of the company's outstanding common stock, on a fully diluted basis, the Series C stock will be redeemable during a 30-day period at its liquidation preference plus accrued or accumulated dividends, unless the holders of two-thirds of the Series C stock approve the transaction.
The company has a right of first refusal with regard to sales or transfers of the company's securities owned by Steiner constituting more than five percent of the company's outstanding common stock, on a fully diluted basis. In addition, the company has the option to repurchase the company's securities owned by Steiner, upon a change in control in the ownership of Steiner.
If after December 31, 1994, the price of the company's common stock is below $7 for at least 20 consecutive trading days (or if the agreement is not extended), Steiner may require the company either to find a buyer (which may be the company) for all of Steiner's holdings (or all its holdings except the debenture or Series D stock), or to sell Steiner additional common stock equal to Steiner's existing holdings on an as-converted basis, at a price selected by Steiner which is not higher than 115 percent of the market price of the company's common stock. The company will not decide until it knows the terms on which it is to find a buyer for Steiner's holdings or to sell Steiner additional common stock, which of the two options it will elect.
13. Commitments and Contingencies The company (as lessee) leases office space under operating leases having remaining non-cancelable lease terms in excess of one year. Rental expense for the years ended December 31, 1993, 1992 and 1991 amounted to $9,779, $10,103 and $10,393, respectively. Future minimum rental payments are as follows:
1994 1995 1996 1997 1998 Therea fter $8,856 $8,873 $8,161 $6,588 $5,484 $22,62
The company (as lessor) has operating leases with tenants that provide for fixed minimum rent and reimbursement of a portion of operating costs. Additional rents for reimbursements included in rental income amounted to $390, $447, and $506 for 1993, 1992 and 1991, respectively.
Tenant leases on commercial office and mixed-use properties have terms of up to ten years, and leases on residential properties generally have terms of one year or less. Minimum future rental revenue from non-cancelable leases in effect at December 31, 1993 are as follows:
1994 1995 1996 1997 1998 Therea fter $10,97 $9,609 $2,742 $1,509 $836 $546
In connection with the company's investment in a real estate joint venture to develop certain condominium properties in Boston, Massachusetts, the company has guaranteed, jointly and severally with its joint venture partner, the construction loan provided to the joint venture in the amount of $13,000. The loan is primarily secured by a mortgage and security agreement covering the property and various other assignment of rights and interests.
The company has jointly and severally guaranteed completion of a $88,800 construction contract which was entered into by Turner Steiner International, S.A., in which the company has a 50% interest.
In connection with the sale of certain assets and liabilities of a construction subsidiary, the company agreed to guaranty or otherwise indemnify their surety up to $15,000 in obtaining bonds in excess of $45,000.
The company owns certain buildings, hangars and equipment and is the ground lessee on the underlying land located at an air industrial park. The company has leased to a tenant the buildings, hangars, equipment and land with an initial term of 10 years expiring in 1996. The tenant was acquired by a third party in 1989. As part of the acquisition, the acquirer agreed to assume the tenant's lease obligations for the balance of its initial term and agreed to make joint efforts with the company to find a replacement tenant for the facility. Unless the company is able to replace the tenant, expiration of the lease may adversely affect the company's earnings. Rental income under this lease represented 33% of total rental income for 1993.
The company is a defendant in various routine litigations incident to its business. While in some instances the amounts sought are very substantial and certain parties are withholding amounts included in construction receivables, pending the outcome of the litigation, in the opinion of management the resolution of such litigation will not have a material adverse effect on the financial position and results of operations of the company.
14. Other Income, net The major components of Other income, net are as follows:
1993 1992 1991 Intere $1,036 $1,035 $1,297 st and divide nd income Invest 861 - - ment income Pensio n curtai lment - - 29,862 gain (Note 10) Equity (3,027 (3,928 (875) in ) ) affili ates' net loss Other 260 (10) (468) ($870) ($2,90 $29,81 3) 6
15. Business Segments The Consolidated Statements of Operations provide segment information regarding revenues and operating expenses. Interest expense has been included in each segment presented. Certain other financial data of the company's business segments (construction and real estate) are presented below:
1993 1992 1991 Identi fiable assets at
year end:
Constr $452,3 $483,2 $498,1 uction 93 45 80 Real 125,98 143,79 147,01 estate 0 2 9 Genera 85,833 99,521 89,642 l corpor ate $664,2 $726,5 $734,8 06 58 41
Deprec iation and
amorti zation
expens e:
Constr $3,034 $3,706 $3,937 uction Real 5,460 5,930 6,202 estate Genera 1,330 1,407 1,311 l corpor ate $9,824 $11,04 $11,45 3 0
16. Disclosures about Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and Cash Equivalents: The carrying amount of cash and cash equivalents approximates fair value due to the short-term maturity of these amounts.
Marketable Securities: The fair value of marketable securities is based on quoted market prices for such investments. At December 31, 1993 and 1992, the fair value approximates the carrying amount.
Construction Receivables and Construction Payables: The carrying amount of construction receivables and construction payables approximate fair value as these amounts generally are due or payable within the company's operating cycle.
Notes Payable: The fair value of notes payable secured by real estate properties that mature within one year, is estimated based on management's intent with respect to refinancing. For those debt instruments which have been subsequently extinguished, the carrying amount approximates fair value. Otherwise, the fair value of such notes payable is estimated based on the company's risk adjusted incremental borrowing rate upon refinancing, given the underlying value of the loan collateral.
The fair value of notes payable secured by real estate properties with maturities in excess of one year, is estimated based on discounting the future cash flows at the company's year-end risk adjusted incremental borrowing rate for a similar debt instrument, given the underlying value of the loan collateral.
The fair value of unsecured notes payable is estimated based on the company's year-end incremental borrowing rate for similar liabilities.
The above methodologies for determining the fair value of notes payable reflect recent agreements entered into and currently under negotiation by the company. At December 31, 1993 and 1992, the fair value of notes payable was $95,021 and $114,580, respectively.
Convertible Debenture: The fair value of the convertible debenture is estimated based on the greater of the company's incremental borrowing rate for a similar debt instrument, or the value of the debt assuming conversion at the year-end stock price, which would reflect the probability of conversion by the debt holder. At December 31, 1993 and 1992, the fair value was $6,000.
ESOP Loan Receivable: The fair value of the loan receivable from the ESOP is estimated based on the fair value of the company's borrowing to fund the ESOP. At December 31, 1993 and 1992, the fair value was $12,255 and $13,533, respectively.
Interest Rate Swap Agreement: The fair value of the interest rate swap agreement on the adjustable rate revenue refunding bonds is estimated based on the discounted value of the difference between the fixed payments on the swap and the payments that would be required at current market fixed rates for a similar financial instrument. The fair value of the interest rate swap liability was $286 at December 31, 1993. The fair value of the interest rate swap was zero at December 31, 1992.
17. QUARTERLY FINANCIAL INFORMATION (Unaudited)
1993 March June 30 Septemb Decembe Quarte 31 er 30 r 31 r Ended Value $ 580,941 $ 737,080 $ 735,223 $ 715,135 of constr uction comple ted Gross $ 15,758 $ 14,936 $ 16,952 $ 11,719 earnin gs Income 1,704 1,280 1,816 (14,569 ( (loss) ) a before ) income taxes Net 946 909 911 (8,971) income (loss) Primar .09 .09 .09 (1.83) y earnin gs (loss) per common share (e) Fully .08 .08 .07 (b) dilute d earnin gs (loss) per common share (e) 1992 March June 30 Septemb Decembe Quarte 31 er 30 r 31 r Ended Value $ 594,208 $ 669,885 $ 687,136 $ 693,565 of constr uction comple ted Gross $ 13,335 $ 15,646 $ 18,787 $ 17,747 earnin gs Income (1,740) 2,275 2,276 1,391 (loss) before income taxes Income (loss) before extrao rdinar y gain and (1,040) 1,268 1,216 786 cumula tive effect of accoun ting change Net 414 ( 1,268 1,216 1,102 ( income c d ) ) Primar y earnin gs (loss) per common share: (e)
Before extrao rdinar y item and cumula tive effect of (.26) .20 .16 .05 accoun ting change Net .03 .20 .16 .11 income per common share Fully dilute d earnin gs (loss) per common share: (e)
Before extrao rdinar y item and cumula tive effect of (.22) .17 .14 .05 accoun ting change Net .02 .17 .14 .10 income per common share (a) The fourth quarte r includ es a restru cturin g charge of $8,500 and real estate write- downs and reserv es of $5,188 . (b) Antidi lutive . (c) The first quarte r includ es the cumula tive effect of a change in accoun ting method of $1,454 . (d) The fourth quarte r includ es an extrao rdinar y gain of $316. (e) The quarte rly per share amount s are comput ed indepe ndentl y of annual amount s.
Responsibilities for Financial Reporting
The management of The Turner Corporation and Subsidiaries has the responsibility for preparing the accompanying consolidated financial statements and for their integrity and objectivity. The financial statements were prepared in accordance with generally accepted accounting principles applied on a consistent basis and are not misstated due to material fraud or error. The financial statements include amounts that are based on management's best estimates and judgements. Management also prepared the other information in the annual report and is responsible for its accuracy and consistency with the financial statements.
The fair presentation of the company's financial position, results of operations and cash flows are reported on by the independent public accountants, Arthur Andersen & Co. (see Report of Independent Public Accountants) for each of the three years in the period ended December 31, 1993. Their report emphasizes that the company has significant interests in real estate properties, the carrying amounts of which are based on management's present intent to hold these properties until market conditions improve to the extent necessary to achieve reasonable prices upon disposition. Management has made available to Arthur Andersen & Co. all of the company's financial records and related data, as well as the minutes of stockholders' and directors' meetings. Furthermore, management believes that all representations made to Arthur Andersen & Co. during its audit were valid and appropriate.
To fulfill the responsibility for the reporting of financial results, management maintains a system of accounting and internal controls, including a program of internal audits which encompasses operational, financial and special audits. Management seeks to assure the quality of financial reporting by careful selection and training of supervisory and management personnel, by organization structures that provide an appropriate division of responsibility, and by communication of accounting and business policies and procedures throughout the company. Management believes the internal accounting controls in use provide reasonable assurance that the company's assets are safeguarded, that transactions are executed in accordance with management's authorizations, and that the financial records are reliable for the purpose of preparing financial statements. In addition, the company has distributed a statement of its policies for conducting business affairs in a lawful and ethical manner and receives reports of compliance annually.
The Board of Directors, through the Audit Committee of the Board, meets separately and jointly with management, the internal auditors and the independent public accountants on a periodic basis to assure itself that each is carrying out its responsibilities. THE TURNER CORPORATION and Subsidiaries SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES at December 31, 1993
Col. A Col. B Col. C C Col. E o l . D D e d u c t i o n s Balance Amounts Amount Balance at s at Dec. 31, 1993 Name of Jan. 1, Addition Collecte Written Current Non- Debtor 1993 s d Off Current
R. Wille $100,000 $100,000 - - - - S. 165,000 165,000 Robinson - - - - J. 100,000 100,000 Little - - - - M. Smith 115,221 115,221 - - - - J. 130,178 112,516 17,662 McCullou - - - gh Y. Roth 130,847 7,660 123,187 - - - N. Makes 117,000 17,000 100,000 - - - R. Wund 168,941 80,000 70,000 18,941 - - W. 85,597 22,700 108,297 Manteuff - - el
These loans were made in accordan ce with company policy relating to the purchase of a new residenc e in connecti on with transfer s, reassign ments or other circumst ances relating to the business of the company. The loans outstand ing at 12/31/93 bear interest at rates ranging from 4.32% to 10.50% and mature at various dates from 1994 to 2003 and in most instance s are collater alized. Certain amounts in column E constitu te "bridge" loans made pending a sale of a transfer red employee 's home and bear no interest .
THE TURNER CORPORATION and Subsidiaries SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES at December 31, 1992
Col. A Col. B Col. C C Col. E o l . D D e d u c t i o n s Balance Amounts Amount Balance at s at Dec. 31, 1992 Name of Jan. 1, Addition Collecte Written Current Non- Debtor 1992 s d Off Current
R. Wille $100,000 $100,000 - - - - J. 100,000 $50,000 $50,000 - Turnier - - S. 165,000 165,000 Robinson - - - - J. 100,000 100,000 Little - - - - M. Smith 101,817 $13,404 115,221 - - - J.McCull 130,178 $112,516 17,662 ough - - - Y. Roth 130,847 130,847 - - - - N. Makes 117,000 117,000 - - - - R. Wund 68,941 100,000 150,000 18,941 -
These loans were made in accordan ce with company policy relating to the purchase of a new residenc e in connecti on with transfer s, reassign ments or other circumst ances relating to the business of the company. The loans outstand ing at 12/31/92 bear interest at rates ranging from 5.06% to 8.75% and mature at various dates from 1993 to 2001 and in most instance s are collater alized. Certain amounts in column E constitu te "bridge" loans made pending a sale of a transfer red employee 's home and bear no interest .
THE TURNER CORPORATION and Subsidiaries SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES at December 31, 1991
Col. A Col. B Col. C C Col. E o l . D D e d u c t i o n s Balance Amounts Amount Balance at s at Dec. 31, 1991 Name of Jan. 1, Addition Collecte Written Current Non- Debtor 1991 s d Off Current
R. Wille $109,789 $9,789 $100,000 - - - J. 100,000 $100,000 - Turnier - - - S. 165,000 165,000 Robinson - - - - J. 100,000 100,000 Little - - - - M. Smith 103,189 $1,372 101,817 - - - J.McCull 112,516 $17,662 112,516 17,662 ough - - Y. Roth 130,847 130,847 - - - - N. Makes 117,000 117,000 - - - -
These loans were made in accordan ce with company policy relating to the purchase of a new residenc e in connecti on with transfer s, reassign ments or other circumst ances relating to the business of the company. The loans outstand ing at 12/31/91 bear interest at rates ranging from 6.5% to 8.75% and mature at various dates from 1992 to 2001 and in most instance s are collater alized. Certain amounts in column E constitu te "bridge" loans made pending a sale of a transfer red employee 's home and bear no interest .
THE TURNER CORPORATION and Subsidiaries SCHEDULE IX -- SHORT- TERM BORROWINGS
Maximum Average Weighte d Weighte Amount Amount Average d Category of Aggregate Balance at Average Outstan Outstan Interes Short Tem Borrowings ding ding t Rate End of Interes During During During t the the the Period Rate Period Period Period (2) (3) (3)
Amounts Payable to 199 0 n/a $11,000 $4,952, 6.31% banks for Borrowing: 3 ,000 500 (1)
199 0 n/a $6,750, $2,120, 5.78% 2 000 833
199 0 n/a $14,650 $4,339, 8.08% 1 ,000 167
(1) - Short- term borrowing facilities are maintained with various banks and are subject to periodic renewals. (2) - The maximum amount outstanding is based upon month end balances. (3) - Average was computed using month end balances and interest rates.
Item 9.
Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure.
None
PART III
Item 10.


Item 10. Directors and Executive Officers of the Registrant.
The information with respect to the directors and nominees for directors which will appear in the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission prior to April 30, 1994, is incorporated herein by reference.
Executive Officers of the Registrant.
Served as an Officer in the Capacity Name Age Office Indicated Since Alfred T. McNeill57 Chairman of the Board, Chairman since 3/1/89. Chief Executive Officer and Director Harold J. Parmelee56 President and Director President since 5/11/90. Ralph Beck 55 Senior Vice President Secretary since 12/31/93. and Secretary Joseph V. Vumbacco48 Senior Vice President and Senior V.P. since 12/5/86. General Counsel David J. Smith 53 Senior Vice President and 1/1/94. Chief Financial Officer Allen H. Wahlberg60 Senior Vice President 1/1/91. Ralph W. Johnson 57 Senior Vice President 6/11/93. Donald R. Kerstetter63Senior Vice President 6/11/93. Richard H. Esau, Jr.59 Vice President 6/11/93. Francis C. O'Connor 51 Vice President 11/1/92. Garrett Thompson 51 Vice President 3/1/93. Donald G. Sleeman 39 Treasurer 1/15/92. Anthony C. Breu 46 Controller 6/1/88.
Each executive officer holds office at the pleasure of the Board of Directors.
Each of the executive officers listed above is an employee of The Turner Corporation or Turner Construction Company and has been an employee of these companies or other construction subsidiaries in an executive, managerial or engineering capacity for the past five years except for Mr. Smith. From 1983 to 1993 Mr. Smith served as Vice President and Treasurer of Mack Trucks, Inc., a subsidiary of Renault. From 1976 to 1983 Mr. Smith held various executive financial positions within the Renault organization.
Item 11.
Item 11. Executive Compensation.
The information which will appear under the caption "Remuneration of Executive Officers" in the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission prior to April 30, 1994, is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information under the caption "Election of Directors" in the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission prior to April 30, 1994 with respect to the ownership by certain beneficial owners and management of the registrant's stock is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions.
The information under the caption "Election of Directors" in the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission prior to April 30, 1994 with respect to certain relationships and related transactions is incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form -8- K.
a) Documents filed as part of this report (including documents incorporated herein by reference):
1. Financial Statements: Page No. - Report of Independent Public Accountants 14 - Consolidated Balance Sheets - as of December 31, 1993 and 1992 15 - Consolidated Statements of Operations - for the years ended December 31, 1993, 1992 and 1991 16 - Consolidated Statements of Stockholders' Equity - for the years ended December 31, 1993, 1992 and 1991 17 - Consolidated Statements of Cash Flows - for the years ended December 31, 1993, 1992 and 1991 18 - Notes to Consolidated Financial Statements 19- - Responsibilities for Financial Reporting 37
2. Financial Statement Schedules: Page No. II. Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other than Related Parties 38-40 IX Short-Term Borrowings 41 3. Consent of Independent Public Accountants 50
Individual financial statements of the registrant and financial statement schedules not included above are omitted since they are either not required or not applicable or the information has been presented in the notes to consolidated financial statements.
4. Exhibits
Exhibit No. Description 3(a)(i) Certificate of Incorporated herein by Incorporation, as reference to Exhibit 3 to the amended to 7/10/89. Registration Statement on Form S-14 of The Turner Corporation, No. 2- 90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein 3(a)(iii) Amendment dated, 9/12/88 by reference to Exhibit 3(a) 3(a)(iv) Amendment dated, 7/10/89 to the Company's 1989 Annual Report on Form 10-K.
3(b) By-Laws, as amended to 6/11/93.
3(c)(i) Certificate of Designations Incorporated herein relating to Series C 8-1/2% by reference to Exhibit Convertible Preference Stock. 2 to the Company's Form 8-K dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein relating to Series D 8-1/2% by reference to Convertible Preference Stock. Exhibit 3 to the Company's Form 8-K dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein by relating to Series E 8-1/2% reference to Exhibit 4 to Convertible Preference Stock. the Company's Form 8-K dated July 20, 1992. Exhibit No. Description
4(a) Shareholders Rights Incorporated herein by Agreement. reference to the Registration Statement on Form 8-A dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein Holder's Rights, Obligations by reference to and Options. Exhibit 5 to the Company's Form 8-K dated July 20, 1992.
10(c)(i) The Company's Executive Incorporated herein Incentive Compensation by reference to Plan. Exhibit 10.3 to the Registration Statement on Form S-14 of The Turner Corporation, No. 2-90235.
10(c)(ii) The Company's 1981 Stock Incorporated herein by reference Option Plan, as amended. to Exhibit 10(c)(v) to the Company's 1988 Annual Report on Form 10-K.
10(c)(iii) The Company's 1986 Incorporated herein by reference Stock Option Plan, to Exhibit 10(c)(vii) to the as amended as amended. Company's 1988 Annual Report on Form 10-K.
10(c)(iv) The Company's 1992 Stock Incorporated herein by reference to the Option Plan. Registration Statement on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein Compensation Plan. by reference to Exhibit 10(c)(v) to the Company's 1983 Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Incorporated herein by reference Benefit Equalization Plan,to Exhibit 10(c)(vi) to the Company's amended and restated as of 1992 Annual Report 1/22/92. on Form 10-K.
10(c)(vii) The Company's Defined Incorporated herein Contribution Retirement by reference to Exhibit 10(c)(vii) to Equalization Plan. the Company's 1992 Annual Report on Form 10-K. Exhibit No. Description
10(c)(viii) The Company's Supplemental Incorporated herein Executive Defined Benefit by reference to Exhibit 10(c)(viii) to Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein Executive Defined Contribution by reference to Exhibit 10(c)(ix) to Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by Income Plan amended and reference to Exhibit 10(c)(ix) restated as of 1/1/89. to the Company's 1991 Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by Stock Purchase Plan. reference to Registration Statement on Form S-8, File No. 33-33867.
10(c)(xii) Employees' Retirement Incorporated herein by Plan - Restated as of reference to Exhibit 10(c)(vii) 1/1/87. to the Company's 1991 Annual Report on Form 10-K.
10(c)(xiii) Employees' Retirement Incorporated herein Income Plan as of 4/1/91. by reference to Exhibit 10(c)(viii) to the Company's 1991 Annual Report on Form 10-K.
10(d) Asset Purchase Agreement Incorporated herein dated 6/3/92, between by reference to Turner Steiner International Exhibit 10(d) to S.A. and Turner International the Company's 1992 Industries, Inc., and Turner Annual Report on Form 10-K. International Industries (U.K.) Ltd.
10(e) Joint Venture and Shareholders Incorporated herein Agreement dated 6/3/92 between by reference to The Turner Corporation and Karl Exhibit 10(e) to Steiner Holding AG. the Company's 1992 Annual Report on Form 10-K. Exhibit No. Description
10(f) Purchase Agreement dated Incorporated herein June 3, 1992 between Karl by reference to Steiner Holding AG and The Exhibit 1 to the Turner Corporation. Company's Form 8-K dated July 20, 1992.
10(g)(i) The Company's Revolving Credit Facility dated as of 12/30/92.
10(g)(ii) Amendment No. 1 to Credit Agreement dated as of 12/31/93.
10(h) Form of Change of Control Agree- ment between The Turner Corp- oration and Messrs. McNeill, Parmelee, Smith and Vumbacco, respectively, Chairman, President, Chief Financial Officer and General Counsel dated July 1, 1993.
10(i) Form of Change of Control Agreement with 56 other officers of parent or subsidiaries dated July 1, 1993.
11 Computation of per share earnings.
22 Subsidiaries of the Registrant. SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
THE TURNER CORPORATION
Registrant
Date: March 11, 1994 By: A. T. McNeill A. T. McNeill Chairman of the Board, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name Capacity Date
H. Baumann-Steiner Director March 11, 1994 (H. Baumann-Steiner)
H. D. Conant Director March 11, 1994 (H. D. Conant)
W. G. Ehlers Director March 11, 1994 (W. G. Ehlers)
A. G. Fieger Director March 11, 1994 (A. G. Fieger)
E. T. Gravette, Jr. Director March 11, 1994 (E. T. Gravette, Jr.)
L. Lomo Director March 11, 1994 (L. Lomo)
E. J. McMahon Director March 11, 1994 (E. J. McMahon) Name Capacity Date
A. T. McNeill Chairman of the Board, March 11, 1994 (A. T. McNeill Chief Executive Officer and Director
C. H. Moore, Jr. Director March 11, 1994 (C. H. Moore, Jr.)
H. J. Parmelee President and Director March 11, 1994 (H. J. Parmelee)
D. J. Smith Senior Vice President March 11, 1994 (D. J. Smith) and Chief Financial Officer
P. K. Steiner Director March 11, 1994 (P. K. Steiner)
G. A. Walker Director March 11, 1994 (G. A. Walker)
J. O. Whitney Director March 11, 1994 (J. O. Whitney)
F. W. Zuckerman Director March 11, 1994 (F. W. Zuckerman)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our report dated March 4, 1994 included in this Form 10-K, into the Company's previously filed Registration Statements on Form S-8 (File Nos. 2-64509 and 33-33867).
ARTHUR ANDERSEN & CO.
New York, New York March 30, 1994
EXHIBIT INDEX
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein Incorporation, as by reference to amended to 7/10/89. Exhibit 3 to the Registration Statement on Form S-14 of The Turner Corporation, No. 2-90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein 3(a)(iii) Amendment dated, 9/12/88 by reference to 3(a)(iv) Amendment dated, 7/10/89 Exhibit 3(a) to the Company's 1989 Annual Report on Form 10-K.
3(b) By-Laws, as amended to 6/11/93.
3(c)(i) Certificate of Designations Incorporated herein relating to Series C 8-1/2% by reference to Convertible Preference Stock. Exhibit 2 to the Company's Form 8-K dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein relating to Series D 8-1/2% by reference to Convertible Preference Stock. Exhibit 3 to the Company's Form 8-K dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein relating to Series E 8-1/2% by reference to Convertible Preference Stock. Exhibit 4 to the Company's Form 8-K dated July 20, 1992. Exhibit No. Description
4(a) Shareholders Rights Incorporated herein Agreement. by reference to the Registration Statement on Form 8-A dated September 9, 1988
4(b) Agreement regarding Security Incorporated herein Holder's Rights, Obligations by reference to and Options. Exhibit 5 to the Company's Form 8-K dated July 20, 1992.
10(c)(i) The Company's Executive Incorporated herein Incentive Compensation by reference to Plan. Exhibit 10.3 to the Registration Statement on Form S-14 of The Turner Corporation, No. 2-90235.
10(c)(ii) The Company's 1981 Stock Incorporated herein Option Plan, as amended. by reference to Exhibit 10(c)(v) to the Company's 1988 Annual Report on Form 10-K.
10(c)(iii) The Company's 1986 Incorporated herein by Stock Option Plan, referenceto Exhibit 10(c)(vii) as amended. to the Company's 1988 Annual Report on Form 10-K.
10(c)(iv) The Company's 1992 Stock Incorporated herein by Option Plan. reference to the Registration Statement on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein by Compensation Plan. reference to the Exhibit 10(c)(v) to the Company's 1983 Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Incorporated herein by reference to Benefit Equalization Plan, Exhibit 10(c)(vi) to the Company's 1992 amended and restated as of Annual Report on Form 10-K. 1/22/92.
Exhibit No. Description
10(c)(vii) The Company's Defined Incorporated herein by reference to Contribution Retirement Exhibit 10(c)(vii) to the Company's 1992 Equalization Plan. Annual Report on Form 10-K.
10(c)(viii) The Company's Supplemental Incorporated herein Executive Defined Benefit by reference to Exhibit 10(c)(viii) to Retirement Plan. the Company's 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein by reference Executive Defined Contribution to Exhibit 10(c)(ix) to the Company's Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by reference to Income Plan amended and Exhibit 10(c)(ix) to the Company's restated as of 1/1/89. 1991 Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by Stock Purchase Plan. reference to Registration Statement on Form S-8, File No. 33-33867.
10(c)(xii) Employees' Retirement Incorporated herein Plan - Restated as of by reference to 1/1/87. Exhibit 10(c)(vii) to the Company's 1991 Annual Report on Form 10-K.
10(c)(xiii) Employees' Retirement Incorporated herein Income Plan as of 4/1/91. by reference to Exhibit 10(c)(viii) to the Company's 1991 Annual Report on Form 10-K.
10(d) Asset Purchase Agreement Incorporated herein dated 6/3/92, between by reference to Turner Steiner International Exhibit 10(d) to S.A. and Turner International the Company's 1992 Industries, Inc., and Turner Annual Report on Form International Industries (U.K.) 10-K. Ltd.
10(e) Joint Venture and Shareholders Incorporated herein Agreement dated 6/3/92 between by reference to The Turner Corporation and Karl Exhibit 10(e) to Steiner Holding AG. the Company's 1992 Annual Report on Form 10-K. Exhibit No. Description
10(f) Purchase Agreement dated Incorporated herein June 3, 1992 between Karl by reference to Steiner Holding AG and The Exhibit 1 to the Turner Corporation. Company's Form 8-K dated July 20, 1992.
10(g)(i) The Company's Revolving Credit Facility dated as of 12/30/92.
10(g)(ii) Amendment No. 1 to Credit Agreement dated as of 12/31/93.
10(h) Form of change Control Agree- ment between The Turner Corp- oration and Messrs. McNeill, Parmelee, Smith and Vumbacco, respectively, Chairman, President, Chief Financial Officer and General Counsel dated July 1, 1993.
10(i) Form of Change of Control Agree- ment with 56 other officers of parent or subsidiaries dated July 1, 1993.
11 Computation of per share earnings.
22 Subsidiaries of the Registrant.