Company Quick10K Filing
Quick10K
Tutor Perini
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$17.05 50 $856
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-24 Shareholder Vote
8-K 2019-05-08 Earnings, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-08-07 Earnings, Exhibits
8-K 2018-05-25 Officers, Shareholder Vote, Exhibits
8-K 2018-01-05 Officers, Exhibits
AMZN Amazon 935,370
TWLO Twilio 16,800
MASI Masimo 7,480
GOSS Gossamer Bio 1,230
EPZM Epizyme 1,090
CODI Compass Diversified Holdings 1,010
NTLA Intellia Therapeutics 739
SENS Senseonics Holdings 418
AQXP Aquinox Pharmaceuticals 65
EETA Eco Energy Tech Asia 0
TPC 2019-03-31
Part I. – Financial Information
Item 1. – Financial Statements
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. – Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 tpc-20190331xex10_1.htm
EX-31.1 tpc-20190331xex31_1.htm
EX-31.2 tpc-20190331xex31_2.htm
EX-32.1 tpc-20190331xex32_1.htm
EX-32.2 tpc-20190331xex32_2.htm
EX-95 tpc-20190331xex95.htm

Tutor Perini Earnings 2019-03-31

TPC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tpc-20190331x10q.htm 10-Q TPC Form 10-Q - Q1 2019_Taxonomy2018







UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q



(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 1-6314

Tutor Perini Corporation

(Exact Name of Registrant as Specified in its Charter)



 

 

MASSACHUSETTS

 

04-1717070

State or Other Jurisdiction of

Incorporation or Organization

 

I.R.S. Employer Identification No.



 

 

15901 OLDEN STREET, SYLMAR, CALIFORNIA

 

91342-1093

Address of Principal Executive Offices

 

Zip Code



(818) 362-8391

Registrant’s Telephone Number, Including Area Code



None

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



 

Large accelerated filer 

Accelerated filer 

Non-accelerated filer  

Smaller reporting company 

Emerging growth company 

 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

Securities registered pursuant to Section 12(b) of the Act:



 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value

TPC

The New York Stock Exchange



The number of shares of common stock, $1.00 par value per share, of the registrant outstanding at May 2, 2019 was 50,180,225.


 

 







TUTOR PERINI CORPORATION AND SUBSIDIARIES



TABLE OF CONTENTS





 

 

 



 

 

Page Numbers

Part I.

Financial Information:

 



Item 1.

Financial Statements:

 



 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018 (Unaudited)



 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018 (Unaudited)



 

Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (Unaudited)



 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 (Unaudited)



 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7-25 



Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26-31 



Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32 



Item 4.

Controls and Procedures

32 

Part II.

Other Information:

 



Item 1.

Legal Proceedings

32 



Item 1A.

Risk Factors

32 



Item 4.

Mine Safety Disclosures

32 



Item 5.

Other Information

32 



Item 6.

Exhibits

33 



Signature

 

34 

 

2


 



PART I. – FINANCIAL INFORMATION



Item 1. – Financial Statements



TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



UNAUDITED











 

 

 

 

 



 

 

 

 

 



Three Months Ended



March 31,

(in thousands, except per common share amounts)

2019

 

2018

REVENUE

$

958,487 

 

$

1,028,156 

COST OF OPERATIONS

 

(870,017)

 

 

(961,088)

GROSS PROFIT

 

88,470 

 

 

67,068 

General and administrative expenses

 

(65,557)

 

 

(67,993)

INCOME (LOSS) FROM CONSTRUCTION OPERATIONS

 

22,913 

 

 

(925)

Other income, net

 

422 

 

 

780 

Interest expense

 

(16,425)

 

 

(15,065)

INCOME (LOSS) BEFORE INCOME TAXES

 

6,910 

 

 

(15,210)

Income tax (expense) benefit

 

(2,188)

 

 

4,268 

NET INCOME (LOSS)

 

4,722 

 

 

(10,942)

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

5,078 

 

 

1,182 

NET LOSS ATTRIBUTABLE TO TUTOR PERINI CORPORATION

$

(356)

 

$

(12,124)

BASIC LOSS PER COMMON SHARE

$

(0.01)

 

$

(0.24)

DILUTED LOSS PER COMMON SHARE

$

(0.01)

 

$

(0.24)

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

BASIC

 

50,098 

 

 

49,814 

DILUTED

 

50,098 

 

 

49,814 





The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

 

3


 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



UNAUDITED











 

 

 

 

 



 

 

 

 

 



Three Months Ended



March 31,

(in thousands)

2019

 

2018

NET INCOME (LOSS)

$

4,722 

 

$

(10,942)



 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

 

 

 

 

 

Defined benefit pension plan adjustments

 

330 

 

 

381 

Foreign currency translation adjustments

 

348 

 

 

(1,174)

Unrealized gain (loss) in fair value of investments

 

673 

 

 

(85)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

1,351 

 

 

(878)



 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

 

6,073 

 

 

(11,820)

LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

5,180 

 

 

1,182 

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO TUTOR PERINI CORPORATION

$

893 

 

$

(13,002)





The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

 

 



4


 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



UNAUDITED









 

 

 

 

 



 

 

 

 

 



As of March 31,

 

As of December 31,

(in thousands, except share and per share amounts)

2019

 

2018

ASSETS

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents ($38,485 and $43,131 related to VIEs)

$

101,482 

 

$

116,075 

Restricted cash

 

5,095 

 

 

3,788 

Restricted investments

 

63,937 

 

 

58,142 

Accounts receivable ($54,791 and $62,482 related to VIEs)

 

1,347,881 

 

 

1,261,072 

Retainage receivable ($45,618 and $36,724 related to VIEs)

 

490,132 

 

 

478,744 

Costs and estimated earnings in excess of billings

 

1,168,675 

 

 

1,142,295 

Other current assets ($33,666 and $30,185 related to VIEs)

 

124,303 

 

 

115,527 

Total current assets

 

3,301,505 

 

 

3,175,643 

PROPERTY AND EQUIPMENT (P&E), net of accumulated depreciation

of $355,939 and $343,735 (net P&E of $51,128 and $51,508 related to VIEs)

 

492,929 

 

 

490,669 

GOODWILL

 

585,006 

 

 

585,006 

INTANGIBLE ASSETS, NET

 

85,026 

 

 

85,911 

OTHER ASSETS

 

91,804 

 

 

50,523 

TOTAL ASSETS

$

4,556,270 

 

$

4,387,752 

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

 

 

 

 

 

Current maturities of long-term debt

$

11,921 

 

$

16,767 

Accounts payable ($29,210 and $18,070 related to VIEs)

 

597,498 

 

 

621,728 

Retainage payable

 

221,028 

 

 

211,956 

Billings in excess of costs and estimated earnings ($244,617 and $263,764 related to VIEs)

 

579,000 

 

 

573,190 

Accrued expenses and other current liabilities ($35,851 and $34,828 related to VIEs)

 

173,827 

 

 

174,325 

Total current liabilities

 

1,583,274 

 

 

1,597,966 

LONG-TERM DEBT, less current maturities, net of unamortized

discounts and debt issuance costs totaling $32,185 and $34,998

 

886,705 

 

 

744,737 

DEFERRED INCOME TAXES

 

106,113 

 

 

105,521 

OTHER LONG-TERM LIABILITIES

 

184,999 

 

 

151,639 

TOTAL LIABILITIES

 

2,761,091 

 

 

2,599,863 

COMMITMENTS AND CONTINGENCIES (NOTE 10)

 

 

 

 

 

EQUITY

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

Preferred stock - authorized 1,000,000 shares ($1 par value), none issued

 

 —

 

 

 —

Common stock - authorized 75,000,000 shares ($1 par value),

issued and outstanding 50,180,225 and 50,025,996 shares

 

50,180 

 

 

50,026 

Additional paid-in capital

 

1,105,184 

 

 

1,102,919 

Retained earnings

 

701,325 

 

 

701,681 

Accumulated other comprehensive loss

 

(44,200)

 

 

(45,449)

Total stockholders' equity

 

1,812,489 

 

 

1,809,177 

Noncontrolling interests

 

(17,310)

 

 

(21,288)

TOTAL EQUITY

 

1,795,179 

 

 

1,787,889 

TOTAL LIABILITIES AND EQUITY

$

4,556,270 

 

$

4,387,752 



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

 

5


 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



UNAUDITED











 

 

 

 

 



 

 

 

 

 



Three Months Ended March 31,

(in thousands)

2019

 

2018

Cash Flows from Operating Activities:

 

 

 

 

 

Net income (loss)

$

4,722 

 

$

(10,942)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

Depreciation

 

12,831 

 

 

9,301 

Amortization of intangible assets

 

886 

 

 

886 

Share-based compensation expense

 

5,506 

 

 

6,081 

Change in debt discounts and deferred debt issuance costs

 

3,174 

 

 

2,927 

Deferred income taxes

 

142 

 

 

186 

(Gain) loss on sale of property and equipment

 

(107)

 

 

1,471 

Changes in other components of working capital 

 

(154,192)

 

 

(84,272)

Other long-term liabilities

 

2,177 

 

 

1,139 

Other, net

 

76 

 

 

(180)

NET CASH USED IN OPERATING ACTIVITIES

 

(124,785)

 

 

(73,403)



 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisition of property and equipment

 

(14,412)

 

 

(19,970)

Proceeds from sale of property and equipment

 

201 

 

 

3,303 

Investment in securities

 

(8,357)

 

 

(3,288)

Proceeds from maturities and sales of investments in securities

 

3,324 

 

 

3,007 

NET CASH USED IN INVESTING ACTIVITIES

 

(19,244)

 

 

(16,948)



 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from debt

 

394,000 

 

 

665,000 

Repayment of debt

 

(259,691)

 

 

(586,559)

Cash payments related to share-based compensation

 

(2,364)

 

 

(2,308)

Distributions paid to noncontrolling interests

 

(4,000)

 

 

(5,000)

Contributions from noncontrolling interests

 

2,798 

 

 

 —

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

130,743 

 

 

71,133 



 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

(13,286)

 

 

(19,218)

Cash, cash equivalents and restricted cash at beginning of period

 

119,863 

 

 

197,648 

Cash, cash equivalents and restricted cash at end of period

$

106,577 

 

$

178,430 



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6


 

Table of Contents

 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

UNAUDITED

 



(1)     Basis of Presentation



The Condensed Consolidated Financial Statements do not include footnotes and certain financial information normally presented annually under generally accepted accounting principles in the United States (“GAAP”). Therefore, they should be read in conjunction with the audited consolidated financial statements and the related notes included in Tutor Perini Corporation’s (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for the three months ended March 31, 2019 may not be indicative of the results that will be achieved for the full year ending December 31, 2019.



In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the Company’s consolidated financial position as of March 31, 2019 and its consolidated statements of operations and cash flows for the interim periods presented. Intercompany balances and transactions have been eliminated.

 

(2)     Recent Accounting Pronouncements



New accounting pronouncements adopted by the Company during the three months ended March 31, 2019 are discussed below.



In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” adopting amendments to certain disclosure rules that were redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, GAAP or changes in the information environment. The amendments expanded the disclosure requirements relating to the analysis of equity for interim financial statements. Under the amendments, an analysis of the changes in each caption of stockholders’ equity and noncontrolling interests presented in the balance sheet must be provided in a note or separate statement. The analysis must present a reconciliation of the beginning balance to the ending balance of each period for which a statement of earnings is required to be filed. The final rule was effective on November 5, 2018. The Company adopted the final rule effective for the first quarter of 2019. The adoption of the final rule did not have an impact on the Company’s consolidated financial position or results of operations. See Note 15, Changes in Equity, for the new required disclosures.



In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), as amended and supplemented by subsequent ASUs (collectively, “ASC 842”). ASC 842 amends the existing guidance in Accounting Standards Codification (“ASC”) 840, Leases. This ASU requires, among other things, the recognition of lease right-of-use (“ROU”) assets and lease liabilities by lessees for those leases currently classified as operating leases. ASC 842 allowed companies to adopt the new standard by applying either a modified retrospective method to the beginning of the earliest period presented in the financial statements or an optional transition method to initially apply the standard on January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard using the optional transition method. Under this method, financial results reported in periods prior to 2019 are unchanged. The Company elected the package of practical expedients which provides relief from having to reassess (1) whether any expired or existing contracts contain leases, (2) lease classification (as operating or financing) for any expired or existing leases, and (3) initial direct costs for any existing leases. The Company also elected to separate non-lease components from lease components. Based on the Company’s evaluation of ASC 842, the adoption on January 1, 2019 resulted in an increase of $43.3 million to its assets and liabilities on the Condensed Consolidated Balance Sheets with no impact to its results of operations or cash flows



7


 

Table of Contents

 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

The effects of the changes made to the Company’s January 1, 2019 consolidated balance sheet for the adoption of ASC 842 were as follows:







 

 

 

 

 

 

 

 



 

 

BALANCE SHEET

Balance as of

 

Adjustments due to

 

Balance as of

(in thousands)

December 31, 2018(a)

 

ASC 842

 

January 1, 2019

ASSETS

 

 

 

 

 

 

 

 

Other assets(b)

$

50,523 

 

$

43,273 

 

$

93,796 



 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Accrued expenses and other current liabilities(b)

$

174,325 

 

$

11,569 

 

$

185,894 

Other long-term liabilities(b)

 

151,639 

 

 

31,704 

 

 

183,343 

(a)

Balance as previously reported on the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

(b)

Prior to the adoption of ASC 842, operating lease ROU assets and current and long-term operating lease liabilities were not recorded on the Condensed Consolidated Balance Sheets.



In accordance with the new lease standard requirements, the impacts of adoption on the Condensed Consolidated Balance Sheet were as follows:







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

As of March 31, 2019



 

 

 

Balance Without

 

 

BALANCE SHEET

 

 

 

Adoption of

 

Effect of

(in thousands)

 

As Reported

 

ASC 842

 

Change

ASSETS

 

 

 

 

 

 

 

 

 

Other assets(a)

 

$

91,804 

 

$

49,916 

 

$

41,888 



 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Accrued expenses and other current liabilities(a)

 

$

173,827 

 

$

162,383 

 

$

11,444 

Other long-term liabilities(a)

 

 

184,999 

 

 

154,555 

 

 

30,444 

(a)

Prior to the adoption of ASC 842, operating lease ROU assets and current and long-term operating lease liabilities were not recorded on the Condensed Consolidated Balance Sheets.



For the three months ended March 31, 2019, the new requirements of ASC 842 did not have an impact on the Company’s results of operations or cash flows



(3)     Revenue



Disaggregation of Revenue



The following tables disaggregate revenue by end market, customer type and contract type, which the Company believes best depict how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors for the three months ended March 31, 2019 and 2018.







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(in thousands)

 

2019

 

2018

Civil segment revenue by end market:

 

 

 

 

 

 

Mass transit

 

$

146,250 

 

$

150,126 

Bridges

 

 

69,307 

 

 

62,811 

Highways

 

 

41,043 

 

 

17,257 

Tunneling

 

 

34,940 

 

 

8,701 

Other

 

 

41,954 

 

 

24,219 

Total Civil segment revenue

 

$

333,494 

 

$

263,114 



8


 

Table of Contents

 

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(in thousands)

 

2019

 

2018

Building segment revenue by end market:

 

 

 

 

 

 

Commercial and industrial facilities

 

$

109,353 

 

$

173,747 

Health care facilities

 

 

80,227 

 

 

75,081 

Municipal and government

 

 

61,962 

 

 

50,452 

Hospitality and gaming

 

 

47,957 

 

 

81,765 

Education facilities

 

 

42,528 

 

 

32,482 

Mixed use

 

 

36,627 

 

 

41,777 

Mass transit

 

 

29,177 

 

 

 —

Other

 

 

25,635 

 

 

34,937 

Total Building segment revenue

 

$

433,466 

 

$

490,241 







 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(in thousands)

 

2019

 

2018

Specialty Contractors segment revenue by end market:

 

 

 

 

 

 

Mass transit

 

$

81,394 

 

$

75,182 

Commercial and industrial facilities

 

 

44,023 

 

 

39,339 

Health care facilities

 

 

11,652 

 

 

16,365 

Education facilities

 

 

11,580 

 

 

25,304 

Multi-unit residential

 

 

11,389 

 

 

23,089 

Mixed use

 

 

10,669 

 

 

47,857 

Transportation

 

 

6,435 

 

 

33,985 

Other

 

 

14,385 

 

 

13,680 

Total Specialty Contractors segment revenue

 

$

191,527 

 

$

274,801 







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2019



 

 

 

 

 

 

 

Specialty

 

 

 

(in thousands)

 

Civil

 

Building

 

Contractors

 

Total

Revenue by customer type:

 

 

 

 

 

 

 

 

 

 

 

 

State and local agencies

 

$

257,107 

 

$

144,686 

 

$

97,071 

 

$

498,864 

Federal agencies

 

 

23,158 

 

 

40,151 

 

 

7,769 

 

 

71,078 

Private owners

 

 

53,229 

 

 

248,629 

 

 

86,687 

 

 

388,545 

Total revenue

 

$

333,494 

 

$

433,466 

 

$

191,527 

 

$

958,487 









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2018



 

 

 

 

 

 

 

Specialty

 

 

 

(in thousands)

 

Civil

 

Building

 

Contractors

 

Total

Revenue by customer type:

 

 

 

 

 

 

 

 

 

 

 

 

State and local agencies

 

$

226,351 

 

$

115,986 

 

$

106,320 

 

$

448,657 

Federal agencies

 

 

9,855 

 

 

44,311 

 

 

18,723 

 

 

72,889 

Private owners

 

 

26,908 

 

 

329,944 

 

 

149,758 

 

 

506,610 

Total revenue

 

$

263,114 

 

$

490,241 

 

$

274,801 

 

$

1,028,156 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2019



 

 

 

 

 

 

 

Specialty

 

 

 

(in thousands)

 

Civil

 

Building

 

Contractors

 

Total

Revenue by contract type:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price

 

$

242,867 

 

$

114,359 

 

$

155,264 

 

$

512,490 

Guaranteed maximum price

 

 

2,233 

 

 

207,131 

 

 

3,606 

 

 

212,970 

Unit price

 

 

84,878 

 

 

5,228 

 

 

19,003 

 

 

109,109 

Cost plus fee and other

 

 

3,516 

 

 

106,748 

 

 

13,654 

 

 

123,918 

Total revenue

 

$

333,494 

 

$

433,466 

 

$

191,527 

 

$

958,487 







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2018



 

 

 

 

 

 

 

Specialty

 

 

 

(in thousands)

 

Civil

 

Building

 

Contractors

 

Total

Revenue by contract type:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price

 

$

183,904 

 

$

79,001 

 

$

247,424 

 

$

510,329 

Guaranteed maximum price

 

 

5,072 

 

 

262,028 

 

 

15,579 

 

 

282,679 

Unit price

 

 

68,754 

 

 

8,816 

 

 

6,658 

 

 

84,228 

Cost plus fee and other

 

 

5,384 

 

 

140,396 

 

 

5,140 

 

 

150,920 

Total revenue

 

$

263,114 

 

$

490,241 

 

$

274,801 

 

$

1,028,156 



Changes in Contract Estimates that Impact Revenue



Changes to the total estimated contract revenue or cost, either due to unexpected events or revisions to management’s initial estimates, for a given project are recognized in the period in which they are determined. Net revenue recognized during the three month periods ended March 31, 2019 and 2018 related to performance obligations satisfied (or partially satisfied) in prior periods was immaterial.



Remaining Performance Obligations



Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and exclude unexercised contract options. As of March 31, 2019, the aggregate amounts of the transaction prices allocated to the remaining performance obligations of the Company’s construction contracts were $4.5 billion, $2.0 billion and $1.8 billion for the Civil, Building and Specialty Contractors segments, respectively. As of March 31, 2018, the aggregate amounts of the transaction prices allocated to the remaining performance obligations of the Company’s construction contracts were $4.5 billion, $2.2 billion and $1.8 billion for the Civil, Building and Specialty Contractors segments, respectively. The Company typically recognizes revenue on Civil segment projects over a period of three to five years, whereas for projects in the Building and Specialty Contractors segments, the Company typically recognizes revenue over a period of one to three years.



(4)     Contract Assets and Liabilities



The Company classifies contract assets and liabilities that may be settled beyond one year from the balance sheet date as current, consistent with the length of time of the Company’s project operating cycle.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

Contract assets include amounts due under retainage provisions, costs and estimated earnings in excess of billings and capitalized contract costs. The amounts as included on the Condensed Consolidated Balance Sheets consisted of the following:







 

 

 

 

 

 



 

 

 

 

 

 



 

As of March 31,

 

As of December 31,

(in thousands)

 

2019

 

2018

Retainage receivable

 

$

490,132 

 

$

478,744 

Costs and estimated earnings in excess of billings:

 

 

 

 

 

 

Claims

 

 

740,844 

 

 

698,274 

Unapproved change orders

 

 

362,273 

 

 

354,000 

Other unbilled costs and profits

 

 

65,558 

 

 

90,021 

Total costs and estimated earnings in excess of billings

 

 

1,168,675 

 

 

1,142,295 

Capitalized contract costs

 

 

41,973 

 

 

37,404 

Total contract assets

 

$

1,700,780 

 

$

1,658,443 



Retainage receivable represents amounts invoiced to customers where payments have been partially withheld pending the completion of certain milestones, satisfaction of other contractual conditions or the completion of the project. Retainage agreements vary from project to project and balances could be outstanding for several months or years depending on a number of circumstances such as contract-specific terms, project performance and other variables that may arise as the Company makes progress towards completion.



Costs and estimated earnings in excess of billings represent the excess of contract costs and profits (or contract revenue) over the amount of contract billings to date and are classified as a current asset. Costs and estimated earnings in excess of billings result when either: 1) the appropriate contract revenue amount has been recognized over time in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract, or 2) costs are incurred related to certain claims and unapproved change orders. Claims occur when there is a dispute regarding both a change in the scope of work and the price associated with that change. Unapproved change orders occur when a change in the scope of work results in additional work being performed before the parties have agreed on the corresponding change in the contract price. The Company routinely estimates recovery related to claims and unapproved change orders as a form of variable consideration at the most likely amount it expects to receive and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Claims and unapproved change orders are billable upon the agreement and resolution between the contractual parties and after the execution of contractual amendments. Increases in claims and unapproved change orders typically result from costs being incurred against existing or new positions; decreases normally result from resolutions and subsequent billings. As discussed in Note 10, Commitments and Contingencies, the resolution of these claims and unapproved change orders may require litigation or other forms of dispute resolution proceedings. Other unbilled costs and profits are billable in accordance with the billing terms of each of the existing contractual arrangements and, as such, the timing of contract billing cycles can cause fluctuations in the balance of unbilled costs and profits. Ultimate resolution of other unbilled costs and profits typically involves incremental progress toward contractual requirements or milestones.  



Capitalized contract costs primarily represent costs to fulfill a contract that (1) directly relate to an existing or anticipated contract, (2) generate or enhance resources that will be used in satisfying performance obligations in the future and (3) are expected to be recovered through the contract, and are included in other current assets. Capitalized contract costs are generally expensed to the associated contract over the period of anticipated use on the project. During the three months ended March 31, 2019 and 2018, $5.7 million and $4.1 million, respectively, of previously capitalized contract costs were amortized and recognized as expense on the related contracts.



Contract liabilities include amounts owed under retainage provisions and billings in excess of costs and estimated earnings. The amount as reported on the Condensed Consolidated Balance Sheets consisted of the following:







 

 

 

 

 

 



 

 

 

 

 

 



 

As of March 31,

 

As of December 31,

(in thousands)

 

2019

 

2018

Retainage payable

 

$

221,028 

 

$

211,956 

Billings in excess of costs and estimated earnings

 

 

579,000 

 

 

573,190 

Total contract liabilities

 

$

800,028 

 

$

785,146 



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

Retainage payable represents amounts invoiced to the Company by subcontractors where payments have been partially withheld pending the completion of certain milestones, other contractual conditions or upon the completion of the project. Generally, retainage payable is not remitted to subcontractors until the associated retainage receivable from customers is collected.



Billings in excess of costs and estimated earnings represent the excess of contract billings to date over the amount of contract costs and profits (or contract revenue) recognized to date. The balance may fluctuate depending on the timing of contract billings and the recognition of contract revenue. Revenue recognized during the three months ended March 31, 2019 and 2018 and included in the opening billings in excess of costs and estimated earnings balances for each period totaled $301.0 million and $222.9 million, respectively.

 

(5)     Cash, Cash Equivalents and Restricted Cash



The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows:







 

 

 

 

 

 



 

 

 

 

 

 



 

As of March 31,

 

As of December 31,

(in thousands)

 

2019

 

2018

Cash and cash equivalents available for general corporate purposes

 

$

37,268 

 

$

51,749 

Joint venture cash and cash equivalents

 

 

64,214 

 

 

64,326 

Cash and cash equivalents

 

 

101,482 

 

 

116,075 

Restricted cash

 

 

5,095 

 

 

3,788 

Total cash, cash equivalents and restricted cash

 

$

106,577 

 

$

119,863 



Cash equivalents include short-term, highly liquid investments with maturities of three months or less when acquired. Cash and cash equivalents consist of amounts available for the Company’s general purposes, the Company’s proportionate share of cash held by the Company’s unconsolidated joint ventures and 100% of amounts held by the Company’s consolidated joint ventures. In both cases, cash held by joint ventures is available only for joint venture-related uses, including future distributions to joint venture partners.



Amounts included in restricted cash are primarily held as collateral to secure insurance-related contingent obligations, such as insurance claim deductibles, in lieu of letters of credit.

 

(6)     Earnings Per Common Share (EPS)



Basic EPS and diluted EPS are calculated by dividing net income attributable to Tutor Perini Corporation by the following: for basic EPS, the weighted-average number of common shares outstanding during the period; and for diluted EPS, the sum of the weighted-average number of both outstanding common shares and potentially dilutive securities, which for the Company can include restricted stock units, unexercised stock options and the Convertible Notes, as defined in Note 8, Financial Commitments. In accordance with ASC 260, Earnings Per Share (“ASC 260”), the settlement of the principal amount of the Convertible Notes has no impact on diluted EPS because the Company has the intent and ability to settle the principal amount in cash. The Company calculates the effect of the potentially dilutive restricted stock units and stock options using the treasury stock method.





 

 

 

 

 



 

 

 

 

 



Three Months Ended March 31,

(in thousands, except per common share data)

2019

 

2018

Net loss attributable to Tutor Perini Corporation

$

(356)

 

$

(12,124)



 

 

 

 

 

Weighted-average common shares outstanding, basic

 

50,098 

 

 

49,814 

Effect of dilutive restricted stock units and stock options

 

 —

 

 

 —

Weighted-average common shares outstanding, diluted

 

50,098 

 

 

49,814 



 

 

 

 

 

Net loss attributable to Tutor Perini Corporation per common share:

 

 

 

 

 

Basic

$

(0.01)

 

$

(0.24)

Diluted

$

(0.01)

 

$

(0.24)



 

 

 

 

 

Anti-dilutive securities not included above

 

4,518 

 

 

4,507 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

All restricted stock units and stock options that were outstanding during the three months ended March 31, 2019 and 2018 were excluded from weighted-average diluted shares outstanding for the periods, as the shares would have an anti-dilutive effect on the net losses. Since the Company has the intent and ability to settle the principal amount of the Convertible Notes in cash, per ASC 260, the settlement of the principal amount was excluded from the calculation of diluted EPS.



(7)     Income Taxes 



The Company’s effective income tax rate was 31.7% for the three months ended March 31, 2019 and 28.1% for the three months ended March 31, 2018. The effective tax rate for the 2019 period was impacted by immaterial unfavorable nonrecurring items recognized during the period. In addition, the effective tax rates for both periods primarily reflect increases due to state income taxes and decreases due to impacts of earnings attributable to noncontrolling interests for which income taxes are not the responsibility of the Company.

 

(8)     Financial Commitments



Long-Term Debt



Long-term debt as reported on the Condensed Consolidated Balance Sheets consisted of the following:







 

 

 

 

 



 

 

 

 

 



As of March 31,

 

As of December 31,

(in thousands)

2019

 

2018

2017 Senior Notes

$

493,726 

 

$

493,521 

2017 Credit Facility

 

181,500 

 

 

41,000 

Convertible Notes

 

174,089 

 

 

171,481 

Equipment financing and mortgages

 

46,454 

 

 

50,904 

Other indebtedness

 

2,857 

 

 

4,598 

Total debt

 

898,626 

 

 

761,504 

Less: Current maturities

 

11,921 

 

 

16,767 

Long-term debt, net

$

886,705 

 

$

744,737 



The following table reconciles the outstanding debt balance to the reported debt balances as of March 31, 2019 and December 31, 2018:







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



As of March 31, 2019

 

As of December 31, 2018

(in thousands)

Outstanding Long-Term Debt

 

Unamortized Discount and Issuance Costs

 

Long-Term

Debt,

as reported

 

Outstanding Long-Term Debt

 

Unamortized Discount and Issuance Costs

 

Long-Term

Debt,

as reported

2017 Senior Notes

$

500,000 

 

$

(6,274)

 

$

493,726 

 

$

500,000 

 

$

(6,479)

 

$

493,521 

Convertible Notes

 

200,000 

 

 

(25,911)

 

 

174,089 

 

 

200,000 

 

 

(28,519)

 

 

171,481 



The unamortized issuance costs related to the 2017 Credit Facility were $4.4 million and $4.8 million as of March 31, 2019 and December 31, 2018, respectively, and are included in other assets in the Condensed Consolidated Balance Sheets.



2017 Senior Notes



On April 20, 2017, the Company issued $500 million in aggregate principal amount of 6.875% Senior Notes due 2025 (the “2017 Senior Notes”) in a private placement offering. Interest on the 2017 Senior Notes is payable in arrears semi-annually in May and November of each year, beginning in November 2017.



Prior to May 1, 2020, the Company may redeem the 2017 Senior Notes at a redemption price equal to 100% of their principal amount plus a “make-whole” premium described in the indenture. In addition, prior to May 1, 2020, the Company may redeem up to 40% of the original aggregate principal amount of the notes at a redemption price of 106.875% of their principal amount with the proceeds received by the Company from any offering of the Company’s equity. After May 1, 2020, the Company may redeem the 2017 Senior Notes at specified redemption prices described in the indenture. Upon a change of control, holders of the 2017 Senior Notes may

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

require the Company to repurchase all or part of the 2017 Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the redemption date.



The 2017 Senior Notes are senior unsecured obligations of the Company and are guaranteed by substantially all of the Company’s existing and future subsidiaries that also guarantee obligations under the Company’s 2017 Credit Facility, as defined below. In addition, the indenture for the 2017 Senior Notes provides for customary covenants, including events of default and restrictions on the payment of dividends and share repurchases.



2017 Credit Facility



On April 20, 2017, the Company entered into a credit agreement (the “2017 Credit Facility”) with SunTrust Bank as Administrative Agent, Swing Line Lender and L/C Issuer and a syndicate of other lenders. The 2017 Credit Facility provides for a $350 million revolving credit facility (the “2017 Revolver”) and a sublimit for the issuance of letters of credit and swingline loans up to the aggregate amount of $150 million and $10 million, respectively, both maturing on April 20, 2022, unless any of the Convertible Notes, as defined below, are outstanding on December 17, 2020, in which case all such borrowings will mature on December 17, 2020 (subject to certain further exceptions). In addition, the 2017 Credit Facility permits additional borrowings in an aggregate amount of $150 million, which can be in the form of increased capacity on the 2017 Revolver or the establishment of one or more term loans.



Borrowings under the 2017 Revolver bear interest, at the Company’s option, at a rate equal to (a) the London Interbank Offered Rate (“LIBOR”) plus a margin of between 1.50% and 3.00% or (b) a base rate (determined by reference to the highest of (i) the administrative agent’s prime lending rate, (ii) the federal funds effective rate plus 50 basis points, (iii) the LIBOR rate for a one-month interest period plus 100 basis points and (iv) 0%), plus a margin of between 0.50% and 2.00%, in each case based on the Consolidated Leverage Ratio (as defined in the 2017 Credit Facility). In addition to paying interest on outstanding principal under the 2017 Credit Facility, the Company will pay a commitment fee to the lenders under the 2017 Revolver in respect of the unutilized commitments thereunder. The Company will pay customary letter of credit fees. If an event of default occurs and is continuing, the otherwise applicable margin and letter of credit fees will be increased by 2% per annum. The weighted-average annual interest rate on borrowings under the 2017 Revolver was approximately 5.28% during the three months ended March 31, 2019.



The 2017 Credit Facility contains customary covenants for credit facilities of this type, including maximum consolidated leverage ratios ranging from 4.00:1.00 to 3.25:1.00 over the life of the facility and a minimum consolidated fixed charge coverage ratio of 1.25:1.00. On May 7, 2019, certain provisions of the 2017 Credit Facility were amended, including setting the maximum leverage ratio at 3.50:1.00 for the remainder of its term, thus eliminating the step down from 3.50:1:00 to 3.25:1.00. Substantially all of the Company’s subsidiaries unconditionally guarantee the obligations of the Company under the 2017 Credit Facility; additionally, the obligations are secured by a lien on all personal property of the Company and its subsidiaries guaranteeing these obligations.



As of March 31, 2019, there was $169 million available under the 2017 Revolver, and the Company had not utilized the 2017 Credit Facility for letters of credit. The Company was in compliance with the financial covenants under the 2017 Credit Facility as of March 31, 2019.



Convertible Notes



On June 15, 2016, the Company issued $200 million of 2.875% Convertible Senior Notes due June 15, 2021 (the “Convertible Notes”) in a private placement offering. The Convertible Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company. The Convertible Notes bear interest at a rate of 2.875% per year, payable in cash semi-annually in June and December.



Prior to January 15, 2021, the Convertible Notes will be convertible only under the following circumstances: (1) during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (2) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion rate of 33.0579 (or $39.32) on each applicable trading day; or (3) upon the occurrence of specified corporate events. On or after January 15, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

The Convertible Notes will be convertible at an initial conversion rate of 33.0579 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $30.25. The conversion rate will be subject to adjustment for some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company is required to increase, in certain circumstances, the conversion rate for a holder who elects to convert their Convertible Notes in connection with such a corporate event including customary conversion rate adjustments in connection with a “make-whole fundamental change” described in the indenture. Upon conversion, and at the Company’s election, the Company may satisfy its conversion obligation with cash, shares of its common stock or a combination thereof. As of March 31, 2019, the conversion provisions of the Convertible Notes have not been triggered.



Interest Expense



Interest expense as reported in the Condensed Consolidated Statements of Operations consists of the following:







 

 

 

 

 



 

 

 

 

 



Three Months Ended



March 31,

(in thousands)

2019

 

2018

Cash interest expense:

 

 

 

 

 

Interest on 2017 Senior Notes

$

8,594 

 

$

8,594 

Interest on 2017 Credit Facility

 

2,645 

 

 

1,349 

Interest on Convertible Notes

 

1,438 

 

 

1,438 

Other interest

 

574 

 

 

757 

Total cash interest expense

 

13,251 

 

 

12,138 



 

 

 

 

 

Non-cash interest expense:(a)

 

 

 

 

 

Amortization of discount and debt issuance costs on Convertible Notes

 

2,608 

 

 

2,376 

Amortization of debt issuance costs on 2017 Credit Facility

 

361 

 

 

360 

Amortization of debt issuance costs on 2017 Senior Notes

 

205 

 

 

191 

Total non-cash interest expense

 

3,174 

 

 

2,927 



 

 

 

 

 

Total interest expense

$

16,425 

 

$

15,065 

(a)

The combination of cash and non-cash interest expense produces effective interest rates that are higher than contractual rates. Accordingly, the effective interest rates for the 2017 Senior Notes and the Convertible Notes were 7.13% and 9.39%, respectively, for the three months ended March 31, 2019.

 

(9)     Leases



The Company leases certain office space, construction and office equipment, vehicles and temporary housing generally under non-cancelable operating leases. Leases with an initial term of one year or less are not recorded on the balance sheet, and the Company generally recognizes lease expense for these leases on a straight-line basis over the lease term. As of March 31, 2019, the Company’s operating leases have remaining lease terms ranging from less than one year to 10 years, some of which include options to renew the leases. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is a lease at inception. Operating lease ROU assets are included in other assets, while current and long-term operating lease liabilities are included in accrued expenses and other current liabilities, and other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheet as of March 31, 2019. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The present value of future lease payments are discounted using either the implicit rate in the lease, if known, or the Company’s incremental borrowing rate for the specific lease as of the lease commencement date. The ROU asset is also adjusted for any prepayments made or incentives received. The lease terms include options to extend or terminate the lease only to the extent it is reasonably certain any of those options will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company accounts for lease components (e.g., fixed payments) separate from the non-lease components (e.g., common-area maintenance costs). The Company does not have any material financing leases.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 

The following table presents components of lease expense for the three months ended March 31, 2019:







 

 



 

 



Three Months Ended

(in thousands)

March 31, 2019

Operating lease expense

$

3,781 

Short-term lease expense(a)

 

16,571 



 

20,352 

Less: Sublease income

 

259 

Total lease expense

$

20,093 

(a)

Short-term lease expense includes all leases with lease terms ranging from less than one month to one year. Short-term leases include, among other things, construction equipment rented on an as-needed basis as well as temporary housing. 



The following table presents supplemental balance sheet information related to operating leases as of March 31, 2019:







 

 

 



 

 

 



 

As of March 31,

(dollars in thousands)

Balance Sheet Line Item

2019

Assets

 

 

 

ROU assets

Other assets

$

41,977 

Total lease assets

 

$

41,977 

Liabilities

 

 

 

Current lease liabilities

Accrued expenses and other current liabilities

$

11,598 

Long-term lease liabilities

Other long-term liabilities

 

33,341 

Total lease liabilities

 

$

44,939 

Weighted-average remaining lease term (in years)

 

 

5.1 

Weighted-average discount rate

 

 

5.82% 



The following table presents supplemental cash flow information and non-cash activity related to operating leases for the three months ended March 31, 2019:









 

 



 

 



Three Months Ended

(in thousands)

March 31, 2019

Operating cash flow information:

 

 

Cash paid for amounts included in the measurement of lease liabilities

$

(3,765)

Non-cash activity:

 

 

ROU assets obtained in exchange for lease liabilities

$

1,798 



The following table presents maturities of operating lease liabilities on an undiscounted basis as of March 31, 2019:







 

 



 

Year (in thousands)

Operating Leases

2019 (excluding the three months ended March 31, 2019)

$

10,513 

2020

 

10,871 

2021

 

7,636 

2022

 

6,567 

2023

 

5,587 

Thereafter

 

11,662 

Total lease payments

 

52,836 

Less: Imputed interest

 

7,897 

Total

$

44,939 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

UNAUDITED

 



As of December 31, 2018, future minimum lease payments under long-term non-cancelable operating leases as classified under ASC 840 were as follows:





 

 



 

 

Year (in thousands)

Operating Leases

2019

$

14,039 

2020

 

10,706 

2021

 

7,464 

2022

 

6,567 

2023

 

5,587 

Thereafter

 

11,662 



 

56,025 

Less: Sublease rental agreements

 

1,398 

Total

$

54,627 

  



(10)     Commitments and Contingencies 



The Company and certain of its subsidiaries are involved in litigation and other legal proceedings and forms of dispute resolution in the ordinary course of business, including but not limited to disputes over contract payment and/or performance-related issues (such as disagreements regarding delay or a change in the scope of work of a project and/or the price associated with that change) and other matters incidental to the Company’s business. In accordance with ASC 606, the Company makes assessments of these types of matters on a routine basis and, to the extent permitted by ASC 606, estimates and records recovery related to these matters as a form of variable consideration at the most likely amount the Company expects to receive, as discussed further in Note 4, Contract Assets and Liabilities.  In addition, the Company is contingently liable for litigation, performance guarantees and other commitments arising in the ordinary course of business, which are accounted for in accordance with ASC 450, Contingencies. Management reviews these matters regularly and updates or revises its estimates from time to time as warranted by subsequent information and developments.  These assessments require judgments concerning matters that are inherently uncertain, such as litigation developments and outcomes, the anticipated outcome of negotiations and the estimated cost of resolving disputes.  Consequently, these assessments are estimates, and actual amounts may vary from such estimates. In addition, because such matters are typically resolved over long periods of time, the Company’s assets and liabilities may change over time should the circumstances dictate. Management believes that, based on current information and discussions with the Company’s legal counsel, the ultimate resolution of these matters is not expected to have a material effect on the Company’s consolidated financial position.



Long Island Expressway/Cross Island Parkway Matter



The Company reconstructed the Long Island Expressway/Cross Island Parkway Interchange (“LIE Project”) for the New York State Department of Transportation (“NYSDOT”). The $130 million project was substantially completed in January 2004 and was accepted by NYSDOT as complete in February 2006. The Company incurred significant added costs in completing its work and suffered extended schedule costs due to numerous design errors, undisclosed utility conflicts, lack of coordination with local agencies and other interferences for which the Company believes NYSDOT is responsible.



In March 2011, the Company opened a case with the New York State Court of Claims against NYSDOT related to the LIE Project. In May 2011, NYSDOT filed a motion to dismiss the Company’s claim on the grounds that the Company had not provided required documentation for project closeout and filing of a claim. In September 2011, the Company reached agreement on final payment with the Comptroller’s Office on behalf of NYSDOT, which resulted in an amount of $0.5 million payable to the Company and formally closed out the project allowing the Company to re-file its claim. In March 2012, the Company filed its formal Verified Claim seeking $50.7 million in damages. In May 2012, NYSDOT served its answer and asserted counterclaims in the amount of $151 million alleging fraud in the inducement and punitive damages related to alleged violations of the disadvantaged business enterprise (“DBE”) requirements for the project. The Court subsequently ruled that NYSDOT’s counterclaims may only be asserted as a defense and offset to the Company’s claims and not as affirmative claims. In November 2014, the Appellate Division First Department affirmed the dismissal of NYSDOT’s affirmative counterclaims. In June 2018, following additional summary judgment motions, the Court granted the Company’s motion to dismiss NYSDOT’s affirmative defenses, which eliminated the use of NYSDOT’s counterclaims of $151 million as a defense to the claims of the Company. In October 2018, NYSDOT filed a notice of appeal. A trial date for the appeal has not been set.



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UNAUDITED

 

Management has made an estimate of the total anticipated recovery on this project, and such estimate is included in revenue recorded to date. To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the consolidated financial statements at that time. As of March 31, 2019, the Company has also concluded that the potential for a material adverse financial impact due to NYSDOT’s counterclaims is remote.



Fontainebleau Matter



Desert Mechanical, Inc. (“DMI”) and Fisk Electric Company (“Fisk”), wholly owned subsidiaries of the Company, were subcontractors on the Fontainebleau project located in Las Vegas, Nevada, a hotel/casino complex with approximately 3,800 rooms (the “Project”). In June 2009, the owners of the Project filed for bankruptcy protection, under Chapter 11 of the U.S. Bankruptcy Code, in the Southern District of Florida.



DMI and Fisk recorded mechanic’s liens against the Project totaling approximately $44 million, for unpaid labor, materials and equipment it furnished to the Project. Other unaffiliated contractors, subcontractors and suppliers also recorded mechanic’s liens against the Project, subjecting the property to approximately $550 million in total lien claims by the various lien claimants who furnished labor, materials and equipment to the Project (the “Statutory Lienholders”). In June 2009, DMI filed suit against Turnberry West Construction, Inc., the general contractor, in the Eighth Judicial District Court, Clark County, Nevada, and in May 2010, the court entered an order in favor of DMI for approximately $45 million.



In January 2010, the Bankruptcy Court approved the sale of the Property to Icahn Nevada Gaming Acquisition, LLC for approximately $150 million. Certain Project lenders (the “Lenders”) who had recorded deeds of trust as security interests in the property which far exceeded the sale proceeds, filed suit against the Statutory Lienholders, including DMI and Fisk, alleging that all mechanic’s liens were subordinate to the Lenders’ deeds of trust against the property. The Nevada Supreme Court ruled in October 2012 that under Nevada Law, the mechanic’s lien claims had priority over a portion of the deeds of trust, but not all of them.



In October 2013, a comprehensive settlement agreement was reached by and among the Statutory Lienholders and the Lenders to divide the Sale Proceeds such that the Statutory Lienholders would receive approximately $85 million of the sale proceeds (the “Net Statutory Lienholder Proceeds”) and the Lenders would receive the balance. The Bankruptcy Court appointed a mediator to facilitate a settlement between the Statutory Lienholders as to how the Net Statutory Lienholder Proceeds would be distributed, but after engaging in numerous mediation sessions spanning several years, the parties were unable to reach a resolution. DMI filed a motion seeking permission from the Bankruptcy Court to file an action in Nevada to enforce its lien rights against the Net Statutory Lienholder Proceeds, and the motion was granted. Pursuant to that order, litigation involving all Statutory Lienholders was commenced at the end of November 2017 (the “Nevada Action”).



On April 25, 2019, DMI and Fisk agreed to a settlement in the Nevada Action with another Statutory Lienholder, who has guaranteed payment on account of their claims. The settlement amount will be paid when the Bankruptcy Court distributes the Net Statutory Lienholder Proceeds to the Statutory Lienholders, which is expected to occur later in 2019. The settlement had no material impact on the consolidated financial statements.



Five Star Electric Matter



In the third quarter of 2015, Five Star Electric Corp. (“Five Star”), a wholly owned subsidiary of the Company that was acquired in 2011, entered into a tolling agreement (which has since expired) related to an ongoing investigation being conducted by the United States Attorney’s Office for the Eastern District of New York (“USAO EDNY”). Five Star has been cooperating with the USAO EDNY since late June 2014, when it was first made aware of the investigation, and has provided information requested by the government related to its use of certain minority-owned, women-owned, small and disadvantaged business enterprises and certain of Five Star’s employee compensation, benefit and tax practices.



As of March 31, 2019, the Company cannot predict the ultimate outcome of the investigation and cannot reasonably estimate the potential loss or range of loss that Five Star or the Company may incur or the impact of the results of the investigation on Five Star or the Company.



Alaskan Way Viaduct Matter



In January 2011, Seattle Tunnel Partners (“STP”), a joint venture between Dragados USA, Inc. and the Company, entered into a design-build contract with the Washington State Department of Transportation (“WSDOT”) for the construction of a large diameter bored tunnel in downtown Seattle, King County, Washington to replace the Alaskan Way Viaduct, also known as State Route 99.

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UNAUDITED

 



The construction of the large diameter bored tunnel required the use of a tunnel boring machine (“TBM”). In December 2013, the TBM struck a steel pipe, installed by WSDOT as a well casing for an exploratory well. The TBM was damaged and was required to be repaired. STP has asserted that the steel pipe casing was a differing site condition that WSDOT failed to properly disclose. The Disputes Review Board mandated by the contract to hear disputes issued a decision finding the steel casing was a Type I differing site condition. WSDOT has not accepted that finding.



The TBM was insured under a Builder’s Risk Insurance Policy (the “Policy”) with Great Lakes Reinsurance (UK) PLC and a consortium of other insurers (the “Insurers”). STP submitted the claims to the Insurers and requested interim payments under the Policy. The Insurers refused to pay and denied coverage. In June 2015, STP filed a lawsuit in the King County Superior Court, State of Washington seeking declaratory relief concerning contract interpretation, as well as damages as a result of the Insurers’ breach of their obligations under the terms of the Policy. STP is also asserting extra-contractual and statutory claims against the Insurers. WSDOT is deemed a plaintiff since WSDOT is an insured under the Policy and had filed its own claim for damages. Hitachi Zosen (“Hitachi”), the manufacturer of the TBM, has also joined the case as a plaintiff for costs incurred to repair the damages to the TBM. In September 2018, rulings received on pre-trial motions effectively limited potential recovery under the Policy for STP, WSDOT and Hitachi. However, on December 19, 2018, the Court of Appeal granted the Company’s request for a discretionary appeal of those rulings. The appeal is expected to be heard in the second half of 2019. STP submitted damages to the Insurers in the King County lawsuit in the amount of $532 million. STP is also seeking these damages from WSDOT and Hitachi related to the pipe-strike by the TBM in a related lawsuit in Thurston County (see following paragraph). 



In March 2016, WSDOT filed a complaint against STP in Thurston County Superior Court for breach of contract alleging STP’s delays and failure to perform, seeking $57.2 million in damages and seeking declaratory relief concerning contract interpretation. STP filed its answer to WSDOT’s complaint and filed a counterclaim against WSDOT and Hitachi seeking damages of $667 million. Trial is scheduled for October 2019.



As of March 31, 2019, the Company has concluded that the potential for a material adverse financial impact due to the Insurers’ denial of coverage and WSDOT’s legal actions is neither probable nor remote, and the potential loss or range of loss is not reasonably estimable. With respect to STP’s claims against the Insurers, WSDOT and Hitachi, management has included an estimate of the total anticipated recovery, concluded to be both probable and reliably estimable, in receivables or costs and estimated earnings in excess of billings recorded to date. To the extent new facts become known or the final recoveries vary from the estimate, the impact of the change will be reflected in the financial statements at that time.

 

(11)     Share-Based Compensation



As of March 31, 2019, there were 901,834 shares of common stock available for grant under the Tutor Perini Corporation Omnibus Incentive Plan. During the first three months of 2019 and 2018, the Company issued the following share-based instruments: (1) restricted stock units totaling 175,000 and 514,000 with weighted-average fair values per share of $20.41 and $26.49, respectively; (2) stock options totaling 85,000 and 479,000 with weighted-average fair values per share of $7.57 and $11.82, respectively, and weighted-average per share exercise prices of $25.62 and $24.53, respectively. The Company issued 10,000 unrestricted stock units with a weighted-average fair value per share of $25.40 during the three months ended March 31, 2018; no unrestricted stock units were issued in the first quarter of 2019.



The fair value of restricted and unrestricted stock units is based on the closing price of the Company’s common stock on the New York Stock Exchange on the date of the grant and the fair value of stock options is based on the Black-Scholes model. The fair value of stock options granted during the first three months of 2019 was determined using the Black-Scholes model based on the following weighted-average assumptions: (i) expected life of 5.4 years, (ii) expected volatility of 36.63%, (iii) risk-free rate of 2.66%, and (iv) no quarterly dividends. For certain performance-based awards containing market condition components, the fair value on the grant date is determined using a Monte Carlo simulation model.





For the three months ended March 31, 2019 and 2018, the Company recognized, as part of general and administrative expenses, costs for share-based payment arrangements totaling $5.5 million and $6.1 million, respectively. As of March 31, 2019, the balance of unamortized share-based compensation expense was $26.7 million, which is expected to be recognized over a weighted-average period of 2.0 years.

 

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UNAUDITED

 

(12)     Employee Pension Plans



The Company has a defined benefit pension plan and an unfunded supplemental retirement plan. Effective June 1, 2004, all benefit accruals under these plans were frozen; however, the current vested benefit was preserved. The pension disclosure presented below includes aggregated amounts for both of the Company’s plans.



The following table sets forth a summary of the net periodic benefit cost for the three months ended March 31, 2019 and 2018:







 

 

 

 

 



 

 

 

 

 



Three Months Ended March 31,

(in thousands)

2019

 

2018

Interest cost

$

948 

 

$

883 

Expected return on plan assets

 

(1,043)

 

 

(1,077)

Amortization of net loss

 

463 

 

 

513 

Other

 

225 

 

 

213 

Net periodic benefit cost

$

593 

 

$

532 



The Company contributed $0.7 million and $0.8 million to its defined benefit pension plan during the three-month periods ended March 31, 2019 and 2018, respectively, and expects to contribute an additional $3.9 million by the end of 2019.

 

(13)     Fair Value Measurements



The fair value hierarchy established by ASC 820, Fair Value Measurement, prioritizes the use of inputs used in valuation techniques into the following three levels:



·

Level 1 inputs are observable quoted prices in active markets for identical assets or liabilities

·

Level 2 inputs are observable, either directly or indirectly, but are not Level 1 inputs

·

Level 3 inputs are unobservable



The following fair value hierarchy table presents the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of March 31, 2019

 

As of December 31, 2018



 

Fair Value Hierarchy

 

 

 

 

Fair Value Hierarchy

 

 

 

(in thousands)

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Total

Cash and cash equivalents(a)

 

$

101,482 

 

$

 —

 

$

 —

 

$

101,482 

 

$

116,075 

 

$

 —

 

$

 —