Tutor Perini Corporation - 10-Q quarterly report FY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS

Results of Operations

Comparison of the First Quarter of 2001 with the First Quarter of 2000

Overall revenue from construction operations increased by $154.3 million (or 78.0%), from $197.9 million in 2000 to $352.2 million in 2001. This increase resulted from an increase in building construction revenues of $143.7 million (or 102.4%), from $140.3 million in 2000 to $284.0 million in 2001, due primarily to an increase in the volume of work completed at the Mohegan Sun Expansion project in the eastern United States and the start-up of three large hotel/casino projects in the southwestern United States. Civil construction revenues increased by $10.6 million (or 18.4%), from $57.6 million in 2000 to $68.2 million in 2001, due primarily to the start-up of several infrastructure projects in the metropolitan New York area.

Overall pretax income increased by $2.6 million (or 59.2%), from $4.5 million in 2000 to $7.1 million in 2001. This increase primarily reflects the increased revenues discussed above as well as lower construction-related general and administrative expenses and lower interest expense due to the reduction in debt achieved at the end of the first quarter of 2000 as a result of the new equity transaction.

Income from construction operations increased by $1.8 million (or 25.4%), from $7.1 million in 2000 to $8.9 million in 2001. Building construction operating income increased by a net of $3.3 million, from $5.2 million in 2000 to $8.5 million in 2001, due to the increase in revenues discussed above which were partially reduced by a decrease in average gross margin from 6.10% in 2000 to 4.24% in 2001 because 2000 included the favorable close out of certain projects. Despite the increase in civil construction revenues discussed above as well as a decrease in civil construction-related general and administrative expenses, civil construction operating income decreased by $1.5 million, from $1.9 million in 2000 to $0.4 million in 2001, due primarily to downward profit revisions experienced on several joint venture projects sponsored by others.

Interest expense decreased by $1.1 million, from $1.7 million in 2000 to $0.6 million in 2001, due primarily to the reduction in debt achieved at the end of the first quarter of 2000 as a result of the new equity transaction described in Note 3 of Notes to Consolidated Condensed Financial Statements.

The credit (provision) for income taxes reflects a lower than normal tax rate for both 2001 and 2000 due to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations. In addition, the credit for income taxes in 2000 reflects the reversal of foreign taxes accrued in prior years that were no longer required.

Financial Condition

As more fully described in Note 3 of Notes to the Consolidated Condensed Financial Statements, effective March 29, 2000, the Company completed a recapitalization which included the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million in cash (before fees and expenses) and the exchange of 100% of its Redeemable Series B Cumulative Convertible Preferred Stock for an aggregate of 7,490,417 shares of Common Stock. The effect of the recapitalization on the Company’s stockholders’ equity was to increase stockholders’ equity by approximately $76.2 million, from a negative net worth of approximately $36.6 million to a positive net worth of approximately $39.6 million upon completion of the transaction. The recapitalization and the concurrent negotiation of an Amended and Restated Credit Agreement (the “New Credit Agreement”) described below served to significantly enhance the Company’s working capital and liquidity required to support its ongoing construction operations.

Part II. - Other InformationItem 1. - Legal ProceedingsOn July 30, 1993, the U.S. District Court for the District of Columbia, in a preliminary opinion, upheld
termination for default on two adjacent contracts for subway construction between Mergentime-
Perini, under two joint ventures, and the Washington Metropolitan Area Transit Authority ("WMATA")
and found the Mergentime Corporation, Perini Corporation and the Insurance Company of North
America, the surety, jointly and severally liable to WMATA for damages in the amount of $16.5
million, consisting primarily of excess reprocurement costs to complete the projects. Many issues
were left partially or completely unresolved by the opinion, including substantial joint venture claims
against WMATA. In July 1997, the remaining issues were ruled on by a successor judge, who
awarded approximately $4.3 million to the joint venture, thereby reducing the net amount payable to
approximately $12.2 million. The joint venture appealed the decision and filed a motion for a new
trial.
On February 16, 1999, the U.S. Court of Appeals for the District of Columbia vacated the April 1995
and July 1997 Orders and remanded the case back to the successor judge with instructions for the
successor judge to consider certain post-trial motions to the same extent an original judge would
have, and to make findings and conclusions regarding the unresolved issues, giving appropriate
consideration to whether or not witnesses must be recalled. During 1999, a new successor judge
was appointed.
On February 28, 2001, the new successor judge informed the parties that in the absence of a new
trial, he could not certify adequate familiarity with the record to complete the remaining proceedings;
therefore, he ordered that the joint venture's motion for a new trial be granted, with a preliminary
pretrial conference scheduled for April 9, 2001. This decision means that the original July 30, 1993
Decision and Order of the U.S. District Court no longer has any force or effect and that the interim
judgement in favor of WMATA for $16.5 million was set aside.Item 2. - Changes in Securities and Use of Proceeds(a) None
(b) None
(c) None
(d) Not applicable

Part II. - Other Information (Continued)Item 3. - Defaults Upon Senior Securities(a) None
(b) In accordance with the covenants of the 1995 Amended Revolving Credit Agreement, the First
Amended and Restated Credit Agreement effective January 17, 1997 and the Second Amended
and Restated Credit Agreement effective March 29, 2000, the Company was required to suspend the
payment of quarterly dividends on its $21.25 Convertible Exchangeable Preferred Stock ("Preferred
Stock") until certain financial criteria were met, commencing with the dividend that normally would
have been declared during December 1995 through the dividend that normally would have been
declared during March 2001. As of March 31, 2001, the aggregate amount of dividends in arrears is
approximately $11,686,000, which represents approximately $116.86 per share of Preferred Stock or
approximately $11.69 per Depositary Share. While these dividends have not been declared or paid,
they have been fully accrued in accordance with the "cumulative" feature of the Preferred Stock.Item 4. - Submission of Matters to a Vote of Security Holders(a) None
(b) Not applicable
(c) Not applicable
(d) Not applicableItem 5. - Other InformationOn May 3, 2001 the Company was served with a Complaint entitled Frederick Doppelt, Arthur I.
Caplan and Michael Miller v. Perini Corporation, Ronald N. Tutor, Robert Band, Christopher H. Lee,
Marshall M. Criser, Arthur J. Fox, Jr., Michael R. Klein, Richard J. Boushka, Peter Arkley,
Robert A. Kennedy, Jane E. Newman, Douglas J. McCarron, Nancy Hawthorne, Raymond R.
Oneglia, Albert A. Dorman and John J. McHale, Supreme Court of the State of New York, County of
New York, Civil Action No. 602156/01. Each plaintiff is a holder of the Company's Preferred Stock,
and two of the plaintiffs, Messrs. Doppelt and Caplan, are current Directors of the Company and
nominees for Preferred Director. Plaintiffs purport to bring the action individually and on behalf of the
entire class of holders of the Preferred Stock.
Plaintiffs have asserted claims for breach of contract, breach of fiduciary duty, fraud and negligent
misrepresentation. Plaintiffs principally allege that the Company and its Directors improperly
authorized the exchange of Series B Preferred Stock for Common Stock without first paying all
accrued dividends on the Preferred Stock. More specifically, plaintiffs allege that the Company and
its Directors violated the terms of the Preferred Stock when, in March 2000, the Company authorized
the exchange of Series B Preferred Stock for Common Stock. Plaintiffs further allege that the
Company and its Directors issued a false and misleading prospectus in 1987 relating to the issuance
of the Preferred Stock. Plaintiffs seek payment of accrued dividends in the amount of approximately
$11.7 million and unspecified punitive and exemplary damages.
The Company believes that the claims are without merit and intends to vigorously defend the actions
of the Company and its Directors.

Part II. - Other Information (Continued)Item 6. - Exhibits and Reports on Form 8-K(a) The following designated exhibits are, as indicated below, either filed herewith or have heretofore
been filed with Securities and Exchange Commission under the Securities Act of 1933 or the
the Securities Act of 1934 and are referred to and incorporated herein by reference to such filings:
Exhibit 3. Articles of Incorporation and By-laws
Incorporated herein by reference:
3.1 Restated Articles of Organization - As amended through March 29, 2000 -
Exhibit 3.1 to Form 8-K filed on April 12, 2000.
3.2 By-laws - As amended and restated as of March 29, 2000 - Exhibit 3.2 to
Form 8-K filed on April 12, 2000.
Exhibit 4. Instruments Defining the Rights of Security Holders, Including Indentures
Incorporated herein by reference:
4.1 Certificate of Vote of Directors Establishing a Series of a Class of Stock
determining the relative rights and preferences of the $21.25 Convertible
Exchangeable Preferred Stock - Exhibit 4(a) to Amendment No. 1 to Form S-
2 Registration Statement filed June 19, 1987; SEC Registration No. 33-
14434.
4.2 Form of Deposit Agreement, including form of Depositary Receipt - Exhibit
4(b) to Amendment No. 1 to Form S-2 Registration Statement filed June 19,
1987; SEC Registration No. 33-14434.
4.3 Form of Indenture with respect to the 8 1/2% Convertible Subordinated
Debentures Due June 15, 2012, including form of Debenture - Exhibit 4(c) to
Amendment No. 1 to Form S-2 Registration Statement filed June 19, 1987;
SEC Registration No. 33-14434.
4.4 Shareholder Rights Agreement dated as of September 23, 1988, as
amended and restated as of May 17, 1990, as amended and restated as of
January 17, 1997, between Perini Corporation and State Street Bank and
Trust Company, as Rights Agent - Exhibit 4.4 to Amendment No. 1 to
Registration Statement on Form 8-A/A filed on January 29, 1997, and as
further amended as of March 29, 2000 - Exhibit 4.3 to Form 8-K filed on April
12, 2000.
4.5 Stock Purchase and Sale Agreement dated as of July 24, 1996 by and
among the Company, PB Capital and RCBA, as amended - Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q/A for the fiscal quarter ended
September 30, 1996 filed on December 11, 1996 and as amended by the
Termination/Amendment Agreement on March 29, 2000 - Exhibit 4.4 to Form
8-K filed on April 12, 2000.

Part II. - Other Information (Continued)4.8 Certificate of Vote of Directors Establishing a Series of Preferred Stock
determining the relative rights and preferences of the Series B Cumulative
Convertible Preferred Stock, dated January 16, 1997 - Exhibit 4.8 to Form 8-K
filed on February 14, 1997.
4.13 Exchange Agreement by and between Perini Corporation and The Union
Labor Life Insurance Company, acting on behalf of its Separate Account P,
dated as of February 7, 2000 - Exhibit 10.1 to Form 8-K filed on April 12,
2000.
4.14 Exchange Agreement by and between Perini Corporation and PB Capital
Partners, L.P., dated as of February 14, 2000 - Exhibit 10.2 to Form 8-K filed
on April 12, 2000.
4.15 Exchange Agreement by and between Perini Corporation and The Common
Fund for Non-Profit Organizations, dated as of February 14, 2000 - Exhibit
10.3 to Form 8-K filed on April 12, 2000.
4.16 Registration Rights Agreement by and among Perini Corporation, Tutor-
Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union
Fire Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P. The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.1 to Form 8-K filed on
April 12, 2000.
4.17 Shareholders' Agreement by and among Perini Corporation, Tutor-Saliba
Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire
Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.2 to Form 8-K filed on
April 12, 2000.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.1 1982 Stock Option and Long Term Performance Incentive Plan - Exhibit A to
Registrant's Proxy Statement for Annual Meeting of Stockholders dated April
15, 1992.
10.2 Perini Corporation Amended and Restated General Incentive Compensation
Plan - Exhibit 10.2 to 1997 Form 10-K filed on March 30, 1998.
10.3 Perini Corporation Amended and Restated Construction Business Unit
Incentive Compensation Plan - Exhibit 10.3 to 1997 Form 10-K filed on March
30, 1998.
10.16 Management Agreement dated as of January 17, 1997 by and among the
Company, Ronald N. Tutor and Tutor-Saliba Corporation - Exhibit 10.16 to
Form 8-K filed on February 14, 1997.

Part II. - Other Information (Continued)10.30 Second Amended and Restated Credit Agreement dated as of March 29,
2000 among Perini Corporation, the Banks listed herein and Morgan
Guaranty Trust Company of New York, as Agent and Fleet National Bank, as
Co-Agent - Exhibit 10.4 to Form 8-K filed on April 12, 2000.
10.31 Amendment No. 2 dated as of December 31, 1999 to the Management
Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba
Corporation - Exhibit 10.31 to Form 10-Q filed on May 9, 2000.
10.32 Special Equity Incentive Plan - Exhibit A to Registrant's Proxy Statement for
Annual Meeting of Stockholders dated April 19, 2000.
10.33 Securities Purchase Agreement by and among Perini Corporation and Tutor-
Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance
Company of Pittsburgh, PA, dated as of February 5, 2000 - Exhibit 10.1 to Form
8-K filed on February 9, 2000.
10.34 Promissory Note dated as of September 6, 2000 by and among Mt. Wayte
Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The
Manufacturers Life Insurance Company (U.S.A.) - Exhibit 10.34 to Form 10-Q
filed on November 6, 2000.
(b) Reports on Form 8-K - None

Perini CorporationRegistrant
Date: May 11, 2001 /s/ Robert BandRobert Band, President and Chief Operating Officer
Date: May 11, 2001 /s/ Michael E. CiskeyMichael E. Ciskey, Vice President and Controller