XNYS:TPC Tutor Perini Corp Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended March 31, 2012
OR

o
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)

(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 x  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x      No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o
Accelerated filer x
Non-Accelerated filer  o
Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x
 
The number of shares of common stock, $1.00 par value per share, of the registrant outstanding at May 2, 2012 was 47,367,950.
 


 
 

 
 
TUTOR PERINI CORPORATION AND SUBSIDIARIES

 
   
Page Number
Part I. -
Financial Information:
 
       
 
Item 1.
 
       
   
3
       
   
4
       
   
5
       
   
6
       
   
7
       
   
8 – 33
       
 
Item 2.
34 – 40
       
 
Item 3.
40
       
 
Item 4.
40
       
Part II. -
Other Information:
 
       
 
Item 1.
40
       
 
Item 1A.
41
       
 
Item 2.
41
       
 
Item 3.
41
       
 
Item 4.
41
       
 
Item 5.
41
       
 
Item 6.
41 – 43
       
 
44
     

 
2


Part I.  – Financial Information


TUTOR PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2012 AND DECEMBER 31, 2011
(In Thousands, except Share Data)

   
March 31, 2012
   
December 31, 2011
 
ASSETS
           
Cash and Cash Equivalents
  $ 190,414     $ 204,240  
Restricted Cash
    35,450       35,437  
Accounts Receivable, including retainage
    1,184,213       1,275,031  
Costs and Estimated Earnings in Excess of Billings
    377,599       358,398  
Deferred Income Taxes
    1,958       -  
Other Current Assets
    87,862       76,928  
Total Current Assets
    1,877,496       1,950,034  
                 
Long-term Investments
    46,283       62,311  
                 
Property and Equipment (net of Accumulated Depreciation of $117,712 in 2012 and $104,541 in 2011)
    490,011       491,377  
                 
Other Assets:
               
Goodwill
    893,790       892,602  
Intangible Assets, net
    192,960       197,999  
Other
    18,040       18,804  
    $ 3,518,580     $ 3,613,127  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Maturities of Long-term Debt
  $ 60,916     $ 59,959  
Accounts Payable, including retainage
    684,327       785,725  
Billings in Excess of Costs and Estimated Earnings
    376,391       384,282  
Accrued Expenses and Other Current Liabilities
    159,612       163,268  
Total Current Liabilities
    1,281,246       1,393,234  
                 
Long-term Debt, less current maturities
    617,095       612,548  
                 
Deferred Income Taxes
    105,683       97,921  
                 
Other Long-term Liabilities
    111,169       109,597  
                 
Contingencies and Commitments
               
                 
Stockholders’ Equity:
               
Common Stock - $1 par value: 75,000,000 shares authorized; Shares issued and outstanding: 47,367,950 and 47,329,275, respectively
    47,368       47,329  
Additional Paid-in Capital
    996,313       993,434  
Retained Earnings
    401,476       402,679  
Accumulated Other Comprehensive Loss
    (41,770 )     (43,615 )
Total Stockholders' Equity
    1,403,387       1,399,827  
                 
    $ 3,518,580     $ 3,613,127  

  The accompanying notes are an integral part of these consolidated condensed financial statements.

 
3

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
 
   
THREE MONTHS ENDED
 
   
MARCH 31,
 
   
2012
   
2011
 
             
Revenues
  $ 912,534     $ 615,289  
                 
Cost of Operations
    826,375       552,826  
                 
Gross Profit
    86,159       62,463  
                 
General and Administrative Expenses
    69,196       43,950  
                 
INCOME FROM CONSTRUCTION OPERATIONS
    16,963       18,513  
                 
Other Income (Expense), net
    (2,308 )     (447 )
Interest Expense
    (11,082 )     (7,155 )
                 
Income before Income Taxes
    3,573       10,911  
                 
Provision for Income Taxes
    (4,776 )     (3,982 )
                 
NET (LOSS) INCOME
  $ (1,203 )   $ 6,929  
                 
                 
BASIC (LOSS) EARNINGS PER COMMON SHARE
  $ (0.03 )   $ 0.15  
                 
DILUTED (LOSS) EARNINGS PER COMMON SHARE
  $ (0.03 )   $ 0.14  
                 
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
               
BASIC
    47,330       47,100  
Effect of Dilutive Stock Options and Restricted Stock Units Outstanding
    -       762  
DILUTED
    47,330       47,862  
 
The accompanying notes are an integral part of these consolidated condensed financial statements.
 
 
4

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
 (UNAUDITED) (In Thousands)
 
   
THREE MONTHS ENDED
 
   
MARCH 31,
 
   
2012
   
2011
 
             
Net (Loss) Income
  $ (1,203 )   $ 6,929  
                 
Other Comprehensive Income:
               
                 
Foreign currency translation (net of tax of $198)
    323       44  
Change in fair value of investments (net of tax of $154)
    202       -  
Change in fair value of interest rate swap (net of tax of $420)
    (685 )     -  
Realized loss on sale of investments recorded in Net (Loss) Income (net of tax of $1,219)
    2,005       -  
Total Other Comprehensive Income
    1,845       44  
                 
Total Comprehensive Income
  $ 642     $ 6,973  
 
The accompanying notes are an integral part of these consolidated condensed financial statements.

 
5

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2012
(In Thousands)

                     
Accumulated
       
         
Additional
         
Other
       
   
Common
   
Paid-in
   
Retained
   
Comprehensive
       
   
Stock
   
Capital
   
Earnings
   
Loss
   
Total
 
                               
Balance - December 31, 2011
  $ 47,329     $ 993,434     $ 402,679     $ (43,615 )   $ 1,399,827  
                                         
Net (Loss) Income
    -       -       (1,203 )     -       (1,203 )
                                         
Other comprehensive income:
                                       
Foreign currency translation (net of tax of $198)
    -       -       -       323       323  
Change in fair value of investments (net of tax of $154)
    -       -       -       202       202  
Change in fair value of interest rate swap (net of tax of $420)
    -       -       -       (685 )     (685 )
Realized loss on sale of investments recorded in Net (Loss) Income (net of tax of $1,219)
    -       -       -       2,005       2,005  
Total comprehensive income
                                    642  
                                         
Tax effect of stock-based compensation
    -       (195 )     -       -       (195 )
                                         
Stock-based compensation expense
    -       3,419       -       -       3,419  
                                         
Issuance of common stock, net
    39       (345 )     -       -       (306 )
                                         
Balance - March 31, 2012
  $ 47,368     $ 996,313     $ 401,476     $ (41,770 )   $ 1,403,387  
 
The accompanying notes are an integral part of these consolidated condensed financial statements.

 
6

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)

   
THREE MONTHS ENDED
 
   
MARCH 31,
 
   
2012
   
2011
 
Cash Flows from Operating Activities:
           
Net (Loss) Income
  $ (1,203 )   $ 6,929  
Adjustments to reconcile Net (Loss) Income to net cash from operating activities:
               
Depreciation and amortization
    15,790       8,043  
Stock-based compensation expense
    3,419       3,615  
Excess income tax benefit from stock-based compensation
    -       (18 )
Deferred income taxes
    5,693       (411 )
Loss on sale of investments
    2,699       -  
Loss (gain) on sale of equipment
    (79 )     596  
Other long-term liabilities
    214       (243 )
Other non-cash items
    1,031       64  
Changes in other components of working capital
    (52,602 )     (66,229 )
NET CASH USED IN OPERATING ACTIVITIES
    (25,038 )     (47,654 )
                 
Cash Flows from Investing Activities:
               
Acquisitions, net of cash balance acquired
    -       (70,620 )
Business acquisition related payments
    (1,188 )     (3,000 )
Acquisition of property and equipment
    (10,649 )     (8,932 )
Proceeds from sale of property and equipment
    3,968       893  
Investments in available-for-sale securities
    (535 )     -  
Proceeds from sale of available-for-sale securities
    16,553       -  
Change in restricted cash
    (13 )     (8 )
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    8,136       (81,667 )
                 
Cash Flows from Financing Activities:
               
Proceeds from debt
    98,500       58,175  
Repayment of debt
    (95,107 )     (33,119 )
Excess income tax benefit from stock-based compensation
    -       18  
Issuance of common stock and effect of cashless exercise
    (307 )     -  
Debt issuance costs
    (10 )     (25 )
NET CASH PROVIDED BY FINANCING ACTIVITIES
    3,076       25,049  
                 
Net Decrease in Cash and Cash Equivalents
    (13,826 )     (104,272 )
Cash and Cash Equivalents at Beginning of Year
    204,240       471,378  
                 
Cash and Cash Equivalents at End of Period
  $ 190,414     $ 367,106  
                 
Supplemental Disclosure of Cash Paid During the Period For:
               
Interest
  $ 3,320     $ 1,091  
Income taxes
  $ 781     $ 1,296  
Supplemental Disclosure of Non-cash Transactions:
               
Property and equipment acquired through financing arrangements
  $ 2,050     $ 1,604  
Property and equipment additions accrued in accounts payable
  $ -     $ 3,331  
Grant date fair value of common stock issued for services
  $ 1,421     $ 717  

The accompanying notes are an integral part of these consolidated condensed financial statements.
 
 
7

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
(1)
Basis of Presentation

The unaudited consolidated condensed financial statements presented herein include the accounts of Tutor Perini Corporation and its wholly owned subsidiaries (“Tutor Perini” or the “Company”).  The Company’s interests in construction joint ventures are accounted for using the proportionate consolidation method.  These unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America.  These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.  In the opinion of management, the accompanying unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position as of March 31, 2012 and December 31, 2011, results of operations and comprehensive income for the three months ended March 31, 2012 and 2011, and cash flows for the three months ended March 31, 2012 and 2011. The results of operations for the three months ended March 31, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012 because, among other reasons, such results can vary depending on the timing of progress achieved and changes in estimated profitability of projects being reported.

The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures.

(2)
Significant Accounting Policies

The significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note 1 to such financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  During the three months ended March 31, 2012, the Company adopted the following accounting pronouncements that were issued in 2011:

In May 2011, the Financial Accounting Standard Board (“FASB”) issued a staff position amending existing guidance for fair value measurements and disclosures in both interim and annual financial statements.  This update expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. Other than requiring additional disclosures, adoption of this update has not had a material effect on the Company's consolidated financial statements.

In June 2011, the FASB issued a staff position which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. This update eliminates the option to present components of other comprehensive income as part of the statement of equity. The adoption of this update has not had a material effect on the Company's consolidated financial statements.

In September 2011, the FASB issued a staff position that gives an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment. An entity that adopts this option will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. On January 1, 2012, the Company adopted this option. The adoption of this option has not had a material effect on the Company’s consolidated financial statements, but it may impact the manner in which the Company performs testing for goodwill impairment.

 
8

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

In accordance with normal practice in the construction industry, the Company includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess of one year.  Costs and estimated earnings in excess of billings related to the Company’s contracts and joint venture contracts at March 31, 2012 and December 31, 2011, consisted of the following (in thousands):

   
March 31,
   
December 31,
 
   
2012
   
2011
 
Unbilled costs and profits incurred to date*
  $ 128,101     $ 107,645  
Unapproved change orders
    102,011       136,704  
Claims
    147,487       114,049  
    $ 377,599     $ 358,398  

*
Represents the excess of contract costs and profits recognized to date on the percentage of completion accounting method over the amount of contract billings to date on certain contracts.

Of the balance of “Unapproved change orders” and “Claims” included above in costs and estimated earnings in excess of billings at March 31, 2012 and December 31, 2011, approximately $76.6 million and $85.2 million, respectively, are amounts subject to pending litigation or dispute resolution proceedings as described in Note 7.  These amounts are management’s estimate of the probable cost recovery from the disputed claims considering such factors as evaluation of entitlement, settlements reached to date and experience with the customer.  In the event that future facts and circumstances, including the resolution of disputed claims, cause a reduction in the aggregate amount of the estimated probable cost recovery from the disputed claims, the amount of such reduction will be recorded against earnings in the relevant future period.

(3)
Mergers and Acquisitions

(a) Information regarding acquisitions that are material in the aggregate

On January 3, 2011, the Company completed the acquisition of Fisk Electric Company (“Fisk”), a privately held electrical construction company based in Houston, Texas.  Fisk was acquired because the Company believes that it is a strong strategic fit enabling the Company to expand its nationwide electrical construction capabilities and to realize significant synergies and opportunities in support of the Company’s non-residential building and civil operations.  On April 1, 2011, the Company acquired 100% ownership of Anderson Companies (“Anderson”), the privately held parent company of Roy Anderson Corporation, Harrell Contracting Group, LLC and Brice Building Company, LLC. Anderson was acquired because the Company believes that it is a strong strategic fit for the Company’s building business and strengthens the Company’s position in the southeastern United States.  On June 1, 2011, the Company acquired 100% ownership of Frontier-Kemper Constructors, Inc. (“Frontier-Kemper”), a privately held Indiana-based corporation. Frontier-Kemper was acquired because the Company believes that it is a strong strategic fit for the Company’s civil business, bolstering the Company’s tunneling business in the United States and expanding the Company’s geographic reach into Canada.  On August 18, 2011, the Company acquired 100% ownership of Becho, Inc. (“Becho”), a privately held Utah-based corporation. Becho was acquired because the Company believes that it is a strong strategic fit for the Company’s civil business, bolstering the Company’s drilling capabilities in the southwestern United States.

The transactions were accounted for using the purchase method of accounting.  During the three months ended March 31, 2012, the Company did not materially revise any of the assumptions, estimates or amounts used to complete its purchase price accounting as of December 31, 2011.  The Company has not yet completed the final fair value assessment of contingent consideration or the allocation of the purchase price to the tangible and intangible assets for Becho.  Pending the outcome of further analysis, the preliminary purchase price allocation could change.
 
 
9

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
The following unaudited pro forma summary financial information presents the operating results of the combined Company for the three months ended March 31, 2011 assuming that the acquisitions occurred on January 1, 2010. This unaudited pro forma summary financial information is presented for informational purposes only and is not indicative either of the operating results that actually would have occurred had the acquisitions been completed on January 1, 2010, or of future results.

Pro Forma (unaudited)
 
Three Months
Ended
 
   
March 31, 2011
 
(in thousands, except per share data)
     
Revenues
  $ 748,081  
Income from Construction Operations
  $ 23,977  
Net Income
  $ 7,732  
         
Basic earnings per common share
  $ 0.16  
Diluted earnings per common share
  $ 0.16  
 
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as (i) interest expense on acquisition debt; (ii) adjustments to depreciation expense resulting from the adjustment of fixed asset bases to fair value at acquisition; (iii) additional amortization expense related to identifiable intangible assets arising from the acquisitions; (iv) elimination of acquisition related expenses incurred; and (v) to reflect a statutory income tax rate on the pretax income of Fisk, Anderson, Frontier-Kemper and Becho, as well as on the applicable pro forma adjustments made.  The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisitions been in effect on January 1, 2010 or of future results.

(b) Merger with GreenStar Services Corporation

On July 1, 2011, the Company completed a merger with GreenStar Services Corporation (“GreenStar”).  GreenStar is primarily comprised of three operating entities: Five Star Electric Corporation and WDF, Inc., which are located in New York, and Nagelbush Mechanical, Inc. which is located in Florida. GreenStar was acquired because it is one of the largest specialty contractors in the United States and it will provide an opportunity to expand the Company’s presence in the northeastern markets.

The transaction was accounted for using the purchase method of accounting.  During the three months ended March 31, 2012, the Company did not materially revise any of the assumptions, estimates or amounts used to complete its purchase price accounting as of December 31, 2011.
 
The following unaudited pro forma summary financial information presents the operating results of the combined Company for the three months ended March 31, 2011 assuming that the merger occurred on January 1, 2010. This unaudited pro forma summary financial information is presented for informational purposes only and is not indicative either of the operating results that actually would have occurred had the merger been completed on January 1, 2010, or of future results.

 
10

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Pro Forma (unaudited)
 
Three Months
Ended
 
   
March 31, 2011
 
(in thousands, except per share data)
     
Revenues
  $ 770,688  
Income from Construction Operations
  $ 41,073  
Net Income
  $ 19,964  
         
Basic earnings per common share
  $ 0.42  
Diluted earnings per common share
  $ 0.42  
 
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as (i) interest expense on merger debt; (ii) adjustments to depreciation expense resulting from the adjustment of fixed asset bases to fair value at the merger date; (iii) additional amortization expense related to identifiable intangible assets arising from the merger; (iv) elimination of merger related expenses incurred;  and (v) to reflect a statutory income tax rate on the pretax income of GreenStar, as well as on the applicable pro forma adjustments made.  The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the merger been in effect on January 1, 2010 or of future results.
 
 (c) Acquisition of Lunda Construction Company
 
On July 1, 2011, the Company completed the acquisition of Lunda Construction Company (“Lunda”).  Headquartered in Black River Falls, Wisconsin, and with offices in Wisconsin and Minnesota, Lunda is a heavy civil contractor engaged in the construction, rehabilitation and maintenance of bridges, railroads, and other civil structures in the Midwest and throughout the United States.  Lunda was acquired because the Company believes it is a strong strategic fit for its civil business and will provide the Company with the opportunity to expand its civil business into the midwestern United States.
 
The transaction was accounted for using the purchase method of accounting.  During the three months ended March 31, 2012, the Company did not materially revise any of the assumptions, estimates or amounts used to complete its purchase price accounting as of December 31, 2011.

The following unaudited pro forma summary financial information presents the operating results of the combined Company for the three months ended March 31, 2011 assuming that the acquisition occurred on January 1, 2010. This unaudited pro forma summary financial information is presented for informational purposes only and is not indicative either of the operating results that actually would have occurred had the acquisitions been completed on January 1, 2010, or of future results.

Pro Forma (unaudited)
 
Three Months
Ended
 
   
March 31, 2011
 
(in thousands, except per share data)
     
Revenues
  $ 660,059  
Income from Construction Operations
  $ 24,729  
Net Income
  $ 10,002  
         
Basic earnings per common share
  $ 0.21  
Diluted earnings per common share
  $ 0.21  

 
11

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as (i) interest expense on acquisition debt; (ii) adjustments to depreciation expense resulting from the adjustment of fixed asset bases to fair value at acquisition; (iii) additional amortization expense related to identifiable intangible assets arising from the acquisitions; (iv) elimination of acquisition related expenses incurred;  and (v) to reflect a statutory income tax rate on the pretax income of Lunda, as well as on the applicable pro forma adjustments made.  The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisitions been in effect on January 1, 2010 or of future results.

(4)
Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents, as reported in the accompanying Consolidated Condensed Balance Sheets, consist of amounts held by the Company that are available for general corporate purposes and the Company’s proportionate share of amounts held by construction joint ventures that are available only for joint venture-related uses, including future distributions to joint venture partners.  Restricted cash is primarily held to secure insurance-related  contingent obligations, such as insurance claim deductibles, in lieu of letters of credit.  At March 31, 2012 and December 31, 2011, cash and cash equivalents and restricted cash consisted of the following (in thousands):

   
March 31,
   
December 31,
 
   
2012
   
2011
 
       
Corporate Cash and Cash Equivalents
  $ 88,138     $ 109,180  
                 
Company's share of joint venture Cash and Cash Equivalents
    102,276       95,060  
Total Cash and Cash Equivalents
  $ 190,414     $ 204,240  
                 
Restricted Cash
  $ 35,450     $ 35,437  

(5) 
Fair Value Measurements

The Company measures certain financial instruments, including cash and cash equivalents, such as money market funds, at their fair value.  The fair value was determined based on a three-tier valuation hierarchy for disclosure of significant inputs.  These hierarchical tiers are defined as follows:

 
Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

 
Level 2 – inputs are other than quoted prices in active markets that are either directly or indirectly observable through market corroboration.
 
 
Level 3 – inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions based on the best information available in the circumstances.
 
 
12

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2012 and December 31, 2011 (in thousands):  
 
             
Fair Value Measurements at March 31, 2012 Using
 
     
Total
Carrying
Value at
March 31,
2012
     
Quoted
prices in
active
markets
(Level 1)
     
Significant
 other
 observable
 inputs
(Level 2)
     
Significant
 unobservable
 inputs
 (Level 3)
 
Assets:
                               
Cash and Cash Equivalents (1)
  $ 190,414     $ 190,414     $ -     $ -  
Restricted Cash (1)
    35,450       35,450       -       -  
Short-term investments (2)
    3,080       -       3,080       -  
Bonds substituted for retainage (3)
    12,791       -       12,791       -  
Long-term Investments –Auction rate securities (4)
    46,283       -       -       46,283  
Total
  $ 288,018     $ 225,864     $ 15,871     $ 46,283  
                                 
Liabilities:
                               
Interest rate swap contract (5)
  $ 1,368     $ -     $ 1,368     $ -  
Contingent Consideration (6)
    51,697       -       -       51,697  
    $ 53,065     $ -     $ 1,368     $ 51,697  
 
             
Fair Value Measurements at December 31, 2011 Using
 
     
Total
Carrying
Value at
December 31,
2011
     
Quoted
prices in
active
markets
(Level 1)
     
Significant
 other
 observable
 inputs
(Level 2)
     
Significant
 unobservable
 inputs
 (Level 3)
 
Assets:                                
Cash and Cash Equivalents (1)
  $ 204,240     $ 204,240     $ -     $ -  
Restricted Cash (1)
    35,437       35,437       -       -  
Short-term investments (2)
    3,465       1,026       2,439       -  
Bonds substituted for retainage (3)
    12,488       -       12,488       -  
Long-term Investments – Auction rate securities (4)
    62,311       -       -       62,311  
Total
  $ 317,941     $ 240,703     $ 14,927     $ 62,311  
                                 
Liabilities:
                               
Interest rate swap contract (5)
  $ -     $ -     $ -     $ -  
Contingent Consideration (6)
    51,555       -       -       51,555  
    $ 51,555     $ -     $ -     $ 51,555  
 

 
(1)
Cash, cash equivalents and restricted cash consist primarily of money market funds with original maturity dates of three months or less, for which fair value is determined through quoted market prices.
 
(2)
Short-term investments are classified as other current assets and are comprised of municipal bonds.  The fair values of the municipal bonds are obtained from readily-available pricing sources for comparable instruments, and as such, the Company has classified these assets as Level 2.
 
 
13

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
 
(3)
Bonds substituted for retainage are classified as account receivables, including retainage and are comprised of U.S. Treasury Notes and other municipal bonds, the majority of which are rated Aa2 or better.  The fair values of these assets are obtained from readily-available pricing sources for comparable instruments, and as such, the Company has classified these assets as Level 2.
 
(4)
At March 31, 2012 the Company had $46.3 million invested in ARS which the Company considers as available-for-sale long-term investments.  The long-term investments ARS held by the Company at March 31, 2012 are in securities collateralized by student loan portfolios.  At March 31, 2012 most of the Company’s ARS are rated AAA.  The Company estimated the fair value of its ARS utilizing an income approach valuation model which considered, among other items, the following inputs: (i) prices from recent comparable transactions; (ii) other third-party pricing information without adjustment; (iii) the underlying structure of each security; (iv) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (discount rates range from 3-7%) and (v) consideration of the probabilities of default or repurchase at par for each period (term periods range from 6-8 years).
 
(5)
As discussed in Note 10, the Company entered into a swap agreement with Bank of America, N.A. to establish a long-term interest rate for its $200 million five-year term loan.  The swap agreement became effective for the term loan principal balance outstanding at January 31, 2012 and will remain effective through the maturity date of the term loan.  The Company values the interest rate swap liability utilizing a discounted cash flow model that takes into consideration forward interest rates observable in the market and the counterparty’s credit risk.  This liability as classified as a component of other long-term liabilities.
 
(6)
The liabilities listed as of March 31, 2012 above represent the contingent consideration for the acquisitions of Fisk, Anderson, GreenStar, and Lunda for which the measurement period for purchase price analysis has concluded.  The liabilities listed as of March 31, 2011 represent the contingent consideration for the acquisition of Fisk, as each of the other acquisitions listed above were closed subsequent to March 31, 2011.  See the level 3 rollforward below for disclosure of the Company’s valuation approach.   

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2012 and 2011 are as follows (in thousands):

   
Auction Rate
 
   
Securities
 
       
Balance at December 31, 2011
  $ 62,311  
Purchases
    -  
Settlements
    (16,553 )
Realized loss included in other income (expense), net
    (2,699 )
Reversal of pretax impairment charges included in accumulated other comprehensive income (loss)
    3,224  
Balance at March 31, 2012
  $ 46,283  
 
   
Auction Rate
 
   
Securities
 
       
Balance at December 31, 2010
  $ 88,129  
Purchases
    -  
Settlements
    -  
Balance at March 31, 2011
  $ 88,129  

The Company has classified its $46.3 million ARS investment as long-term investments in the Consolidated Condensed Balance Sheet at March 31, 2012, due to the Company’s belief that the market for government-backed student loans may take in excess of twelve months to fully recover.

 
14

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2012 and 2011 are as follows (in thousands):

   
Contingent
 
   
Consideration
 
       
Balance at December 31, 2011
  $ 51,555  
Fair value adjustments included in other income (expense), net
    142  
Balance at March 31, 2012
  $ 51,697  
 
   
Contingent
 
   
Consideration
 
       
Balance at December 31, 2010
  $ -  
Fair value measured at conclusion of purchase price analysis measurement period
    4,200  
Balance at March 31, 2011
  $ 4,200  

The fair values of the contingent consideration were estimated based on an income approach which is based on the cash flows that the acquired entity is expected to generate in the future. This approach requires management to project revenues, operating expenses, working capital investment, capital spending and cash flows for the reporting unit over a multi-year period, as well as determine the weighted-average cost of capital to be used as a discount rate (weighted-average cost of capital inputs have ranged from 14-18%).  As a result of this analysis, the Company increased liabilities accrued at the conclusion of the measurement period by approximately $0.1 million, and the adjustments were included in other income (expense), net in the Consolidated Condensed Statements of Operations.

The carrying amount of cash and cash equivalents approximates fair value due to the short-term nature of these items. The carrying value of receivables, payables, other amounts arising out of normal contract activities, including retainage, which may be settled beyond one year, is estimated to approximate fair value.  Of the Company’s long-term debt, the fair value of the fixed rate senior unsecured notes as of March 31, 2012 is $303 million, compared to its carrying value of $298.1 million.  The fair value of the senior unsecured notes was estimated based on market quotations at March 31, 2012.  For the remainder of the Company’s long-term debt, the carrying value is estimated to approximate fair value. 

There were no significant transfers between level 1 and level 2 financial assets and liabilities that are fair valued on  a recurring basis during the three months ended March 31, 2012 and 2011.

 
15

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(6)
Goodwill and Intangible Assets

Changes in the carrying amount of goodwill during the three months ended March 31, 2012 in connection with our recent acquisitions are shown in the tables below (in thousands):

               
Specialty
   
Management
       
   
Building
   
Civil
   
Contractors
   
Services
   
Total
 
                               
                               
Gross Goodwill
  $ 420,267     $ 430,762     $ 141,833     $ 66,638     $ 1,059,500  
Accumulated Impairment
    (146,847 )     -       -       (20,051 )     (166,898 )
Balance at December 31, 2011
    273,420       430,762       141,833       46,587       892,602  
Acquisition related adjustment
    -       1,188       -       -       1,188  
Balance at March 31, 2012
  $ 273,420     $ 431,950     $ 141,833     $ 46,587     $ 893,790  

Intangible assets consist of the following (in thousands):

   
March 31, 2012
 
Weighted
               
Accumulated
       
Average
         
Accumulated
   
Impairment
   
Carrying
 
Amortization
   
Cost
   
Amortization
   
Charge
   
Value
 
Period
                           
Trade names (non-amortizable)
  $ 117,600     $ -     $ (56,100 )   $ 61,500  
Indefinite
Trade names (amortizable)
    74,350       (1,698 )     (800 )     71,852  
20 years
Contractor license
    6,000       -       (680 )     5,320  
Indefinite
Customer relationships
    39,800       (11,485 )     -       28,315  
11.6 years
Construction contract backlog
    71,140       (45,167 )     -       25,973  
2.9 years
Total
  $ 308,890     $ (58,350 )   $ (57,580 )   $ 192,960    

   
December 31, 2011
 
Weighted
               
Accumulated
       
Average
         
Accumulated
   
Impairment
   
Carrying
 
Amortization
   
Cost
   
Amortization
   
Charge
   
Value
 
Period
                           
Trade names (non-amortizable)
  $ 117,600     $ -     $ (56,100 )   $ 61,500  
Indefinite
Trade names (amortizable)
    74,350       (788 )     (800 )     72,762  
20 years
Contractor license
    6,000       -       (680 )     5,320  
Indefinite
Customer relationships
    39,800       (10,585 )     -       29,215  
11.6 years
Construction contract backlog
    71,140       (41,938 )     -       29,202  
2.9 years
Total
  $ 308,890     $ (53,311 )   $ (57,580 )   $ 197,999    
 
Amortization expense for the three months ended March 31, 2012 and 2011 was $5.0 million and $1.8 million, respectively.  As of March 31, 2012, amortization expense is estimated to be $13.3 million for the remainder of 2012, $15.9 million in 2013, $14.4 million in 2014, $8.5 million in 2015, $6.3 million in 2016 and $67.7 million thereafter.

 
16

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
(7)
Contingencies and Commitments

The Company and certain of its subsidiaries are involved in litigation and are contingently liable for commitments and performance guarantees arising in the ordinary course of business. The Company and certain of its clients have made claims arising from the performance under its contracts. The Company recognizes certain significant claims for recovery of incurred cost when it is probable that the claim will result in additional contract revenue and when the amount of the claim can be reliably estimated. These assessments require judgments concerning matters such as litigation developments and outcomes, the anticipated outcome of negotiations, the number of future claims and the cost of both pending and future claims.  In addition, because most contingencies are resolved over long periods of time, liabilities may change in the future due to various factors.

Several matters are in the litigation and dispute resolution process.  The following discussion provides a background and current status of these matters.

Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter

During 1995 Tutor-Saliba-Perini (“Joint Venture”) filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority (“LAMTA”), seeking to recover costs for extra work required by LAMTA in connection with the construction of certain tunnel and station projects. In 1999, LAMTA countered with civil claims under the California False Claims Act against the Joint Venture, Tutor-Saliba and the Company jointly and severally (together, “TSP”).

Between 2005 and 2010, the court granted certain Joint Venture motions and LAMTA capitulated on others which reduced the number of false claims LAMTA may seek and limited LAMTA’s claims for damages and penalties.  In September 2010, LAMTA dismissed its remaining claims and agreed to pay the entire amount of the Joint Venture’s remaining claims plus interest.   The Court subsequently entered judgment in favor of TSP and against LAMTA in the amount of $3 million.  This amount is after deducting the amount of $0.5 million, representing the tunnel handrail verdict plus accrued interest against TSP.  The parties filed post-trial motions for costs and fees.  The Court ruled TSP’s sureties could recover costs, LAMTA could recover costs for the tunnel handrail trial, and no party could recover attorneys’ fees.  In April 2011, TSP filed a notice of appeal regarding the false claims jury verdict on the tunnel handrail claim and other issues, and LAMTA subsequently filed its notice of cross-appeal.  In October 2011, TSP filed a notice of appeal regarding the Court’s order denying TSP and its Sureties’ request for attorneys’ fees.  In March 2012, the Court finalized the preparation of the record for the Court of Appeal with the filing of opening briefs expected in the 3rd Quarter 2012.  The appeal of this case is expected to take at least a year.

The Company does not expect this matter to have any material effect on its consolidated financial statements.

Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter

Perini/Kiewit/Cashman Joint Venture (“PKC”), a joint venture in which the Company holds a 56% interest and is the managing partner, is currently pursuing a series of claims, instituted at different times over the course of the past ten years, for additional contract time and/or compensation against the Massachusetts Highway Department (“MHD”) for work performed by PKC on a portion of the Central Artery/Tunnel (“CA/T”) project in Boston, Massachusetts.  During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKC’s cost of performance. MHD has asserted counterclaims for liquidated damages and backcharges.

 
17

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Certain of PKC’s claims have been presented to a Disputes Review Board (“DRB”) which consists of three construction experts chosen by the parties. To date, five DRB panels have issued several awards and interim decisions in favor of PKC’s claims, amounting to total awards to PKC in excess of $128 million, of which $110 million were binding awards.

In December 2010, the Suffolk County Superior Court granted MHD’s motion for summary judgment to vacate the Third DRB Panel’s awards to PKC for approximately $55 million.  The Court granted the motion on the grounds that the arbitrators do not have authority to decide whether particular claims are subject to the arbitration provision of the contract.  MHD subsequently moved to vacate approximately $12 million of the Fourth DRB Panel’s total awards to PKC on the same arbitrability basis that the Third DRB’s awards were vacated.  In October 2011, the Suffolk County Superior Court followed its earlier arbitrability rulings holding that the Fourth DRB exceeded its authority in deciding arbitrability with respect to certain of the Fourth DRB Panel’s awards (approximately $8 million of the $12 million discussed above).  PKC is pursuing an appeal of the Superior Court decisions.  That appeal has been fully briefed by the parties and a hearing is scheduled for May 2012.

Subject to the results of further proceedings as a result of the PKC’s appeal of the Court’s decisions with respect to the Third and Fourth DRB Panel’s awards to PKC, the remaining claims to be decided by the DRB primarily consist of interest awards on the previous Third and Fourth DRB rulings in PKC’s favor.  In February 2012, PKC received a $22 million payment for an interest award associated with the Second DRB panel’s awards to PKC.  The parties are currently participating in settlement discussions.

Management has made an estimate of the anticipated recovery on this project and it 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 financial statements at that time.

Long Island Expressway/Cross Island Parkway Matter

The Company reconstructed the Long Island Expressway/Cross Island Parkway Interchange (the “Project”) for the New York State Department of Transportation (the “NYSDOT”). The $130 million project was substantially completed in January 2004 and was accepted by the NYSDOT as finally 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 that the NYSDOT is responsible.

In March 2011, the Company filed its claim and complaint with the New York State Court of Claims and served to the New York State Attorney General’s Office, in the amount of $53.8 million.  In May 2011, the 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 the NYSDOT which resulted in an amount of $0.5 million payable to the Company and formally closed out the project, which will allow the Company’s claim to be re-filed.  The Company re-filed its claim in the amount of $53.8 million with the NYSDOT in February 2012 and with the Court of Claims in March 2012.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

Queensridge Matter

Perini Building Company, Inc. (“PBC”) was the general contractor for the construction of One Queensridge Place, a condominium project in Las Vegas, Nevada.  The developer of the project, Queensridge Towers, LLC / Executive Home Builders, Inc. (“Queensridge”), has failed to pay PBC for work which PBC and its subcontractors performed on the project.  

 
18

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Subcontractors have brought claims against PBC and have outstanding liens on the property in the amount of approximately $19 million.  PBC also has an outstanding lien on the property in the amount of approximately $24 million, representing unpaid contract balances and additional work; $19 million of PBC’s $24 million lien amount would be paid to subcontractors.  Queensridge has alleged that PBC and its subcontractors are not due amounts sought and that it has back charges from incomplete and defective work.  PBC filed an arbitration demand, asserting $35 million in claims against Queensridge, including $25 million for contract damages and $10 million for punitive damages.

In April 2011, the American Arbitration Association granted PBC’s request for consolidation of claims.  All claims will be arbitrated. The arbitration hearings started in early 2012 and are expected to conclude in late 2012.  At the conclusion of the arbitration, the parties will return to District Court to resolve the lien issues.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

Gaylord Hotel and Convention Center Matter
 
In 2005, Gaylord National, LLC (“Gaylord”), as Owner, and Perini Building Company, Inc. / Tompkins Builders, Joint Venture (“PTJV”), as Construction Manager, entered into a contract to construct the Gaylord National Resort and Convention Center (the “Project”) in Maryland. The Project is complete and as part of its settlement with Gaylord reached in November 2008, PTJV agreed to pay all subcontractors and defend all claims and lien actions by them relating to the Project.  PTJV has closed out most subcontracts.  Resolution of the issues with the remaining subcontractors may require mediation, arbitration and/or trial.

PTJV is pursuing an insurance claim for approximately $40 million related to work performed by Banker Steel Company, Inc. (“Banker Steel”), a subcontractor, including $11 million for business interruption costs incurred by Gaylord which have effectively been assigned to PTJV. In November 2009, PTJV filed suit against Factory Mutual Insurance Co. (“FM”) in the Maryland federal district court alleging FM breached the insurance contracts and for declaratory judgment with respect to the insurance coverage.  In December 2010, PTJV filed suit against ACE American Insurance Company (“ACE”) in Maryland federal district court alleging ACE breached the general liability insurance contract, requesting a declaratory judgment with respect to the insurance coverage and for bad faith.

The court assigned an April 2012 trial date; however, the parties are still participating in settlement discussions and agreed to submit to a mediation which is expected to occur in the 2nd or 3rd Quarter of 2012.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

Fontainebleau Matter

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

DMI and Fisk filed liens in Nevada for approximately $44 million, representing unreimbursed costs to date and lost profits, including anticipated profits.  Other unaffiliated subcontractors have also filed liens. In June 2009, DMI filed suit against Turnberry West Construction, Inc. (“Turnberry”), the general contractor, in the 8th Judicial District Court, Clark County, Nevada, and in May 2010, the court entered an order in favor of DMI for approximately $45 million.  DMI is uncertain as to Turnberry’s present financial condition.

 
19

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
In January 2010, the Bankruptcy Court approved the sale of the property to Icahn Nevada Gaming Acquisition, LLC and this transaction closed in February 2010.  As a result of a July 2010 ruling relating to certain priming liens there is now approximately $125 million set aside from this sale, which is available for distribution to satisfy the creditor claims based on seniority.  The total estimated sustainable lien amount is approximately $350 million.  The project lender filed suit against the mechanic’s lien claimants, including DMI and Fisk, alleging that certain mechanic’s liens are invalid and that all mechanic’s liens are subordinate to the lender's claims against the property.  The Nevada Supreme Court has agreed to hear the case and rule on the issue of lien priority, which once received will be referred to the Bankruptcy Court for further proceedings.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

MGM CityCenter Matter

Perini Building Company, Inc., a wholly owned subsidiary of the Company, contracted with MGM MIRAGE Design Group (“MGM”) in March 2005 to construct the CityCenter project in Las Vegas, Nevada (the “Project”).  The Project, which encompasses nineteen separate contracts, is a 66-acre urban mixed use development consisting of hotels, condominiums, retail space and a casino.

The Company achieved substantial completion of the Project in December 2009, and MGM opened the Project to the public on the same date.  In March 2010, the Company filed suit against MGM and certain other property owners in the Clark County District Court alleging several claims including breach of contract, among other items.  In March 2010, the Company also filed a $491 million mechanic’s lien against the Project.

In a Current Report on Form 8-K filed by MGM in March 2010, and in subsequent communications issued, MGM has asserted that it believes it owes substantially less than the claimed amount and that it has claims for losses in connection with the construction of the Harmon Hotel and is entitled to unspecified offsets for other work on the Project. According to MGM, the total of the offsets and the Harmon Hotel claims exceed the amount claimed by the Company.  MGM’s filing and subsequent communications do not specify in any detail the basis for MGM’s belief that it has such claims against the Company.

In May 2010, MGM filed a counterclaim and third party complaint against the Company and its subsidiary Perini Building Company. The court granted the Company and MGM’s joint motion to consolidate all subcontractor initiated actions into the main CityCenter lawsuit.  A trial date has been set for February 2013. MGM has filed a motion to demolish the Harmon Tower, one of the CityCenter buildings.  The Company opposed the motion, and hearings on the motion commenced in March 2012.  These hearings have not yet concluded.  Discovery is ongoing with additional depositions on repair procedures and cost prior to the July hearings.  Trial is set for February 2013.

In public statements, MGM asserted its intent to enter into settlement discussions directly with subcontractors under contract with the Company.  As of March 2012, MGM has reached agreements with subcontractors to settle at a discount $301 million of amounts previously billed to MGM.  The Company has reduced and will continue to reduce amounts included in revenues, cost of construction operations, accounts receivable and accounts payable for the reduction in subcontractor pass-through billings, which the Company would not expect to have an impact on recorded profit.  At March 31, 2012, the Company had approximately $192 million recorded as contract receivables for amounts due and owed to the Company and its subcontractors.  In December 2011, a portion of the amounts owed to one of the Company’s subsidiaries, Fisk, was settled for approximately $15 million.  Included in the Company’s receivables are pass-through subcontractor billings for contract work and retention, and other requests for equitable adjustment for additional work in the amount of $61 million.  As pass-through subcontractor billings are settled, the Company will reduce its mechanic’s lien as appropriate. As of March 31, 2012, the Company’s mechanic’s lien has been reduced to $313 million.

 
20

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
With respect to alleged losses at the Harmon Hotel, the Company has contractual indemnities from the responsible subcontractor, as well as existing insurance coverage that it expects will be available and sufficient to cover any liability that may be associated with this matter.  The Company’s insurance carrier initiated legal proceedings seeking declaratory relief that their insurance policies do not provide for defense or coverage for matters pertaining to the Harmon Towers.  Those proceedings are stayed pending the outcome of the underlying dispute in Nevada District Court.  The Company is not aware of a basis for other claims that would amount to material offsets against what MGM owes to the Company.  The Company does not expect this matter to have any material effect on its consolidated financial statements.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

Honeywell Street/Queens Boulevard Bridges Matter

In 1999, the Company was awarded a contract for reconstruction of the Honeywell Street/Queens Boulevard Bridges (the “Project”) for the City of New York (the “City”).  In June 2003, after substantial completion of the Project, the Company initiated an action to recover $8.75 million in claims from the City on behalf of itself and its subcontractors. In March 2010, the City filed counterclaims for $74.6 million and other relief, alleging fraud in connection with the disadvantaged business enterprise (“DBE”) requirements for the Project. In May 2010, the Company served the City with its response to the City’s counterclaims and affirmative defenses.  Parties are discussing settlement possibilities as discovery efforts continue.  No trial date has been set.

The Company does not expect this matter to have any material effect on its consolidated financial statements.

Westgate Planet Hollywood Matter

Tutor-Saliba Corporation (“TSC”), a wholly owned subsidiary of the Company, contracted to construct a time share development in Las Vegas (the “Project”) which was substantially completed in December 2009.  The Company’s claims against the owner, Westgate Planet Hollywood Las Vegas, LLC (“WPH”), relate to unresolved owner change orders and other claims.  The Company filed a lien on the project in April 2010 in the amount of $19.3 million, and filed its complaint in May 2010 with the District Court, Clark County, Nevada.  Included in the Company’s receivables are pass-through subcontractor billings for contract work and retention of approximately $12 million. Several subcontractors have also recorded liens, some of which have been released by bonds and some of which have been released as a result of subsequent payment.  Westgate has posted a mechanic’s lien release bond for $22.3 million.

WPH filed a cross-complaint alleging non-conforming and defective work for approximately $51 million, primarily related to alleged defects, misallocated costs, and liquidated damages.  Some or all of the allegations will be defended by counsel appointed by TSC’s insurance carrier.  WPH has since revised the amount of their counterclaims to approximately $45 million. 

TSC filed an amended complaint in May 2011, which increases TSC’s claim to $22.3 million, and replaces the cause of action to foreclose its mechanic’s lien with an action against WPH’s lien release bond.

The Court set trial for September 2012 with the discovery process continuing.   The Company does not expect this matter to have any material effect on its consolidated financial statements.

 
21

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

100th Street Bus Depot Matter

The Company constructed the 100th Street Bus Depot for the New York City Transit Authority (“NYCTA”) in New York.  Prior to receiving notice of final acceptance from the NYCTA, this project experienced a failure of the brick façade on the building due to faulty subcontractor work.  The Company has not yet received notice of final acceptance of this project from the NYCTA.  The Company contends defective structural installation by the Company’s steel subcontractor caused or was a causal factor of the brick façade failure.

The Company has tendered its claim to the NYCTA Owner Controlled Insurance Program (“OCIP”) and to Chartis Claims, Inc. (“Chartis”), its insurance carrier.  Coverage was denied in January 2011.  The OCIP and general liability carriers have filed a declaratory relief action in the United States District Court, Southern District of New York against the Company seeking court determination that no coverage is afforded under their policies.  The Company believes it has legal entitlement to recover costs under the policies and intends to defend and pursue its claim against the carriers for breach of contract and appropriate associated causes of action.  The Company filed a lawsuit against certain underwriters at Lloyds, London, the excess carrier, Illinois National Insurance Company, the Insurance Company of the State of Pennsylvania, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, with respect to this claim in the Commonwealth of Massachusetts, Suffolk County Superior Court, in June 2011.  This case will be dismissed and the dispute will be heard in the New York action.  Discovery is ongoing and must be completed by June 2012.

Management has made an estimate of the total anticipated recovery on this project and it 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 financial statements at that time.

Brightwater Matter

In 2006, the Department of Natural Resources and Parks Wastewater Treatment Division of King County (“King County”), as Owner, and Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, Joint Venture (“VPFK”), as Contractor, entered into a contract to construct the Brightwater Conveyance System and tunnel sections (the “Project”) in Washington State. Frontier-Kemper, a wholly owned subsidiary of the Company, is a 20% minority partner in the joint venture.

In April 2010, King County filed a lawsuit alleging damages in the amount of $74 million, plus costs, for VPFK’s failure to complete specified components of the project in the King County Superior Court, State of Washington. Shortly thereafter, VPFK filed a counterclaim in the amount of approximately $75 million, seeking reimbursement for additional costs incurred as a result of differing site conditions, King County’s defective specifications, for damages sustained on VPFK’s tunnel boring machines (“TBM”), and increased costs as a result of hyperbaric interventions. VPFK’s claims related to differing site conditions, defective design specifications, and damages to the TBM were presented to a Dispute Resolution Board (“DRB”).  King County amended the amount sought in its lawsuit to approximately $132 million.  In August 2011, the DRB generally found that King County was liable to VPFK for VPFK’s claims for encountering differing site conditions, including damages to the TBM, but not on VPFK’s alternative theory of defective specifications.  King County has proposed the parties mediate the hyperbaric work claim. VPFK agreed to this request.  Discovery continues and must be completed by June 2012 while the parties continue discussions to identify an agreed upon mediation process.

Trial is currently set for September 2012.

The ultimate financial impact of King County’s lawsuit is not yet determinable.  Management has made an estimate of the total anticipated recovery on the submitted claims and it 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 financial statements at that time.

 
22

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
156 Stations Matter

In December 2003, Five Star Electric Corporation (“FSE”), a wholly owned subsidiary of the Company, entered into an agreement with the Prime Contractor Transit Technologies, L.L.C (“Transit”), a Consortium member of Siemens Transportation Transit Technologies, L.L.C (“Siemens”), to assist in the installation of new public address and customer information screens system for each of the 156 stations for the New York City Transit Authority (“NYCTA”) as the owner. Work on the project commenced in early 2004 and is substantially complete.

In June 2007, FSE submitted a Demand for Arbitration against Transit to terminate its subcontract due to the execution of a Cure Agreement between the NYCTA, Siemens and Transit which severely amended FSE’s rights under the Prime Contract, due to Transit’s failure to provide information and equipment in a manner which would allow work to progress according to the approved baseline schedule, and for failure to tender payment in excess of a year. This arbitration demand also sought $18 million in damages caused by subcontract breaches on the part of Transit. On July 17, 2009, FSE unilaterally terminated its contract with Transit and amended its claim to include all costs incurred through the date it ceased work following its termination.  This claim is for approximately $25 million.

In August 2007, FSE commenced action against the Federal Insurance Company and St. Paul Fire and Marine Insurance Company, the payment bond sureties for the Consortium, in the Supreme Court of the State of New York. FSE’s action was amended in November 2009, to include all costs incurred through the date work ceased following its termination. This claim, like the underlying arbitration, alleges damages of $25 million.

In response, Transit notified Travelers Casualty and Surety Company of America (“Travelers”), FSE’s surety, of its intent to default FSE from the contract for failure to perform. Transit filed a suit against Travelers in May 2011, in the Supreme Court of the State of New York, seeking compensation for damages allegedly suffered by Transit as a result of the actions of FSE and Travelers. The cause and amount of the damages are not specified in the suit; however, the damages are for an amount in excess of $25 million up to the contract amount of $36 million.  By an agreement executed in June 2011, Travelers tendered defense to FSE.  Arbitration has been substantially completed, and the final briefings are in process.

The ultimate financial impact of Transit’s lawsuit is not yet determinable.  Management has made an estimate of the total anticipated recovery on the submitted claims and it 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 financial statements at that time.  Additionally, pursuant to the terms of the merger agreement with the former shareholders of GreenStar, the Company has contractual indemnities for claim losses allowed for by the GreenStar Indemnity Holdbacks as defined in Note 2 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

(8)
Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2012 and 2011 was 133.7% and 36.5%, respectively.   The current period income tax expense of $4.8 million includes discrete items of $3.6 million, related to an increase in unrecognized tax benefits and an adjustment, both associated with certain stock-based compensation items identified during the current period.

For financial statement purposes the Company uses the more-likely-than-not recognition threshold and a tax benefit measurement process for recording changes to unrecognized tax benefits. The Company recognizes interest and penalties on any income tax liabilities as a component of its income tax provision. The total amount of gross unrecognized tax benefits recorded was approximately $2.9 million and $1.7 million as of March 31, 2012 and December 31, 2011, respectively.

 
23

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
The Company has been notified by the Internal Revenue Service that its 2010 U.S. Federal tax return will be examined.

(9) 
Stock-Based Compensation

The Company recognized $3.4 million in general and administrative expenses related to stock-based compensation awards for the three months ended March 31, 2012, and $3.6 million of total compensation expense for the three months ended March 31, 2011.

Restricted Stock Awards
Restricted stock awards vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain pre-established pre-tax income performance targets.  Upon vesting, each award is exchanged for one share of the Company’s common stock.  The grant date fair values of these awards are determined based on the closing price of either the award date (if subject only to service conditions), or, if later, the date that the Compensation Committee establishes the applicable performance target (if subject to performance conditions).   As of March 31, 2012, the Compensation Committee has approved the grant of an aggregate of 4,092,500 restricted stock awards to eligible participants.

In March 2012, the Compensation Committee established the 2012 pre-tax income performance targets for 220,000 restricted stock units awarded in 2009 and 2010.  Additionally, 7,500 restricted stock unit awards were forfeited during the current period.

For the three months ended March 31, 2012 and 2011, the Company recognized $2.5 million and $2.7 million, respectively, of compensation expense related to restricted stock awards.  As of March 31, 2012 there was $10.2 million of unrecognized compensation cost related to the unvested awards which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.0 years. A summary of restricted stock awards activity under the plan for the three months ended March 31, 2012 is as follows:

         
Weighted Average
   
Aggregate
 
   
Number
   
Grant Date
   
Intrinsic
 
   
of Shares
   
Fair Value
   
Value
 
Granted and Unvested - January 1, 2012
    1,185,832     $ 19.65     $ 14,633,167  
Vested
    (58,332 )     24.36       909,229  
Granted
    220,000       15.49       3,427,600  
Forfeited
    (7,500 )     13.32       -  
Total Granted and Unvested
    1,340,000       18.80       20,877,200  
Approved for grant
    211,669    
(a)
      3,297,803  
Total Awarded and Unvested - March 31, 2012
    1,551,669    
n.a.
      24,175,003  
 

 
(a)
Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.
 
The outstanding unvested awards at March 31, 2012 are scheduled to vest as follows, subject where applicable to the achievement of performance targets.  As described above, certain performance targets are not yet established.

 
24

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

   
Number
 
Vesting Date
 
of Awards
 
       
2012
    150,000  
2013
    950,000  
2014
    451,669  
Total
    1,551,669  

Approximately 235,000 of the unvested awards will vest based on the satisfaction of service requirements and 1,316,669 will vest based on the satisfaction of both service requirements and the achievement of pre-tax income performance targets.

Stock Options
Stock option awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain pre-established pre-tax income performance targets. The grant date fair values of these awards are determined based on the Black-Scholes option price model on either the award date (if subject only to service conditions), or, if later, the date that the Compensation Committee establishes the applicable performance target (if subject to performance conditions).  The related compensation expense is amortized over the applicable service period.  The exercise price of the options is equal to the closing price of the Company’s common stock on the date the awards were approved by the Compensation Committee, and the awards expire ten years from the award date. As of March 31, 2012, the Compensation Committee has approved the award of an aggregate of 1,685,465 stock option awards to eligible participants. In March 2012, the Compensation Committee established the 2012 pre-tax income performance target for 150,000 stock options awarded in 2009.

For the three months ended March 31, 2012 and 2011, the Company recognized compensation expense of $0.9 million and $0.9 million, respectively, related to stock option awards.  As of March 31, 2012, there was $3.8 million of unrecognized compensation expense related to the outstanding options which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.0 years.

A summary of stock option activity under the plan for the three months ended March 31, 2012 is as follows:

         
Weighted Average
 
   
Number
   
Grant Date
   
Exercise
 
   
of Shares
   
Fair Value
   
Price
 
Total Granted and Outstanding - January 1, 2012
    1,225,465     $ 10.11     $ 18.45  
Granted
    150,000       5.62       20.33  
Total Granted and Outstanding
    1,375,465       9.62       18.65  
Approved for grant
    150,000    
(a)
      20.33  
Total Awarded and Outstanding - March 31, 2012
    1,525,465    
n.a.
      18.82  

 
(a)
Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.

There were 340,465 options that have vested and were exercisable at March 31, 2012 at a weighted average exercise price of $19.55 per share. Of the remaining options outstanding, approximately 650,000 of the outstanding options will vest based on the satisfaction of service requirements and 535,000 will vest based on the satisfaction of both service requirements and the achievement of pre-tax income performance targets.

The outstanding options had an intrinsic value of $1.4 million and a weighted average remaining contractual life of 7.3 years at March 31, 2012.

 
25

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
During 2009, the Compensation Committee approved the award of 750,000 stock options that vest in five equal annual tranches from 2010 to 2014 subject to the acheivement of pre-tax income performance targets established by the Compensation Committee. In March 2012, the Compensation Committee established the 2012 pre-tax income performance target for the fourth tranche of 150,000 stock options awarded in 2009. The fair value of this tranche was determined using the Black-Scholes option pricing model using the following key assumptions:

Risk-free interest rate
    0.88 %
Expected life of options
 
4.4 yearss
 
Expected volatility of underlying stock
    53.89 %
Expected quarterly dividends (per share)
  $ 0.00  

(10) 
Financial Commitments

Amended Credit Agreement

On August 3, 2011, the Company entered into a Fifth Amended and Restated Credit Agreement (the “Credit Agreement”), as Borrower, with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the “Lender”).  The Credit Agreement allows the Company to borrow up to $300 million on a revolving credit basis (the “Revolving Facility”), with a $50 million sublimit for letters of credit, and an additional $200 million term loan (the “Term Loan”).  Subject to certain conditions, the Company has the option to increase the base facility by up to an additional $50 million.  Substantially all of the Company’s subsidiaries unconditionally guarantee the obligations of the Company under the Credit Agreement.  The obligations under the Credit Agreement are secured by a lien on all personal property of the Company and its subsidiaries party thereto.  Amounts outstanding under the Credit Agreement bear interest at a rate equal to, at the Company's option, (a) the adjusted British Bankers Association LIBOR rate, as defined, plus 200 to 300 basis points (floor of 200 basis points) based on the ratio of consolidated funded indebtedness of the Company and its subsidiaries to consolidated EBITDA or (b) the higher of the Federal Funds Rate plus 50 basis points, or the prime rate announced by Bank of America, N.A., plus up to 200 basis points based on the ratio of consolidated funded indebtedness of the Company and its subsidiaries to consolidated EBITDA.  In addition, the Company has agreed to pay quarterly facility fees ranging from 0.375% to 0.50% per annum of the unused portion of the credit facility.  Any outstanding loans under the Revolving Facility mature on August 3, 2016, while the Term Loan includes quarterly installments of principal and interest payable over a five-year period.

The Credit Agreement requires the Company to comply with certain financial and other covenants including minimum net worth, minimum fixed charge coverage and maximum leverage ratios.  The Company is currently in compliance with the covenants of the Credit Agreement.

The Company had $18.5 million of outstanding borrowings under its Revolving Facility as of March 31, 2012 and no outstanding borrowings as of December 31, 2011.  The Company utilized the Revolving Facility for letters of credit in the amount of $0.2 million and $3.0 million as of March 31, 2012 and December 31, 2011, respectively.  Accordingly, at March 31, 2012, the Company had $281.3 million available to borrow under the Credit Agreement.

On August 26, 2011, the Company entered into a swap agreement (“Swap Agreement”) with Bank of America, N.A. to establish a long-term interest rate for the Term Loan discussed above.  The Swap Agreement pertains to the Term Loan principal balance outstanding at January 31, 2012 and will remain effective through the maturity date of the Term Loan.  Amounts outstanding under the Swap Agreement will bear interest at a rate equal to the Applicable Rate, as defined in the Credit Agreement (based upon the Company’s consolidated leverage ratio), plus 97.5 basis points. The Swap Agreement includes quarterly installments of principal and monthly installments of interest payable through the maturity date of the Term Loan.

(11)
Earnings (Losses) per Common Share

Basic earnings (losses) per common share were computed by dividing net income by the weighted average number of common shares outstanding.  Diluted earnings (losses) per common share was similarly computed after giving consideration to the dilutive effect of stock options and restricted stock awards outstanding on the weighted average number of common shares outstanding. The computation of diluted earnings (losses) per common share for the three months ended March 31, 2012 excludes 1,225,465 stock options, and 1,185,832 restricted stock units because the awards would have an antidilutive effect. The computation of diluted earnings per common share for the three months ended March 31, 2011 excludes 415,000 stock options.

 
26

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
(12) 
Business Segments

The following tables set forth certain reportable segment information relating to the Company’s operations for the three months ended March 31, 2012 and 2011 (in thousands).

   
Reportable Segments
             
               
Specialty
   
Management
               
Consolidated
 
   
Building
   
Civil
   
Contractors
   
Services
   
Totals
   
Corporate
   
Total
 
Three Months Ended March 31, 2012
                                         
Total Revenues
  $ 343,039     $ 250,589     $ 267,736     $ 68,112     $ 929,476     $ -     $ 929,476  
Elimination of intersegment revenues
    (2,245 )     (1,216 )     (298 )     (13,183 )     (16,942 )     -       (16,942 )
Revenues from external customers
    340,794       249,373       267,438       54,929       912,534       -       912,534  
Income from Construction Operations
    (8,897 )     16,842       19,748       1,886       29,579       (12,616 ) *     16,963  
                                                         
Three Months Ended March 31, 2011
                                                       
Total Revenues
  $ 365,483     $ 128,648     $ 91,685     $ 46,035     $ 631,851     $ -     $ 631,851  
Elimination of intersegment revenues
    (4,863 )     (3,603 )     -       (8,096 )     (16,562 )     -       (16,562 )
Revenues from external customers
    360,620       125,045       91,685       37,939       615,289       -       615,289  
Income from Construction Operations
    11,252       13,052       928       2,641       27,873       (9,360 ) *     18,513  
 

* Consists primarily of corporate general and administrative expenses.

(13)
Employee Pension Plans

The Company has a defined benefit pension plan and an unfunded supplemental retirement plan.  Effective September 1, 2004, all benefit accruals under the Company’s pension plan 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 the net periodic benefit cost by component for the three months ended March 31, 2012 and 2011 (in thousands):
 
 
27

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
 
Three Months
 
 
Ended March 31,
 
 
2012
 
2011
 
Interest cost
  $ 1,005     $ 1,108  
Expected return on plan assets
    (1,186 )     (1,254 )
Amortization of net loss
    1,396       992  
                 
Net periodic benefit cost
  $ 1,215     $ 846  

The Company contributed $0.8 million and $0.6 million to its defined benefit pension plan during the three months ended March 31, 2012 and 2011, respectively.  The Company expects to contribute an additional $3.1 million to its defined benefit pension plan during the remainder of fiscal year 2012.

(14)
Related Party Transactions

The Company leases certain facilities from Ronald N. Tutor, the Company’s Chairman and Chief Executive Officer, and an affiliate owned by Mr. Tutor under non-cancelable operating lease agreements with monthly payments of $0.2 million, which increase at 3% per annum beginning August 1, 2009 and expire on July 31, 2016.  Lease expense for these leases, recorded on a straight-line basis, was $0.6 million for the three months ended March 31, 2012 and 2011, respectively.

The Vice Chairman of O&G Industries, Inc. (“O&G”) is a director of the Company.  O&G occasionally participates in joint ventures with the Company.  The Company’s share of revenues related to these joint ventures amounted to $1.5 million and $1.6 million (or less than 1%) for the three months ended March 31, 2012 and 2011, respectively.  O&G’s cumulative holdings of the Company’s stock as of March 31, 2012 and 2011 were 600,000 shares, or 1.27% of total common shares outstanding at March 31, 2012.

The Company periodically utilizes flight services from JF Aviation, LLC. James A. Frost is the Owner of JF Aviation, LLC and serves as Executive Vice President and Chief Executive Officer of the Company’s Civil segment.  During the three months ended March 31, 2012 and 2011, the transactions amounted to approximately $0.3 million and $0, respectively.

(15) 
Separate Financial Information of Subsidiary Guarantors of Indebtedness

The Company’s obligation to pay principal and interest on its 7.625% senior unsecured notes due November 1, 2018, is guaranteed on a joint and several basis by substantially all of the Company’s existing and future subsidiaries that guarantee obligations under the Company’s Credit Agreement, with certain exceptions (the “Guarantors”).  The guarantees are full and unconditional and the Guarantors are 100%-owned by the Company.  The following supplemental condensed consolidating financial information reflects the summarized financial information of the Company as the issuer, the Guarantors and the Company’s non-guarantor subsidiaries on a combined basis.

 
28

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
CONDENSED CONSOLIDATING BALANCE SHEET - MARCH 31, 2012 (UNAUDITED)
(In Thousands)

   
Tutor Perini
 Corporation
   
Guarantor
Subsidiaries
   
Non-
Guarantor
 Subsidiaries
   
Eliminations
   
Total
 Consolidated
 
ASSETS
                             
Cash and Cash Equivalents
  $ 122,283     $ 41,080     $ 27,051     $ -     $ 190,414  
Restricted Cash
    26,991       8,459       -       -       35,450  
Accounts Receivable
    118,747       1,133,784       6,527       (74,845 )     1,184,213  
Costs and Estimated Earnings in Excess of Billings
    91,207       303,315       152       (17,075 )     377,599  
Deferred Income Taxes
    -       15,283       -       (13,325     1,958  
Other Current Assets
    64,635       30,534       3,811       (11,118 )     87,862  
Total Current Assets
    423,863       1,532,455       37,541       (116,363 )     1,877,496  
                                         
Long-term Investments
    46,283       -       -       -       46,283  
Property and Equipment, net
    54,482       430,484       5,045       -       490,011  
Intercompany Notes and Receivables
    82,115       584,299       (12,024 )     (654,390 )     -  
Other Assets:
                                       
Goodwill
    -       893,790       -       -       893,790  
Intangible Assets, net
    -       192,960       -       -       192,960  
Investment in Subsidiaries
    2,367,114       4       50       (2,367,168 )     -  
Other
    15,396       8,847       20,375       (26,578 )     18,040  
    $ 2,989,253     $ 3,642,839     $ 50,987     $ (3,164,499 )   $ 3,518,580  
                                         
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                       
Current Maturities of Long-term Debt
  $ 37,074     $ 23,842     $ -     $ -     $ 60,916  
Accounts Payable
    49,484       724,778       1,985       (91,920 )     684,327  
Billings in Excess of Costs and Estimated Earnings
    75,406       300,951       34       -       376,391  
Accrued Expenses and Other Current Liabilities
    71,146       83,399       29,510       (24,443 )     159,612  
Total Current Liabilities
    233,110       1,132,970       31,529       (116,363 )     1,281,246  
                                         
Long-term Debt, less current maturities
    515,993       125,686       -       (24,584 )     617,095  
Deferred Income Taxes
    99,916       7,761       -       (1,994     105,683  
Other Long-term Liabilities
    106,948       4,221       -       -       111,169  
                                         
Contingencies and Commitments
                                       
                                         
Intercompany Notes and Advances Payable
    629,899       18,050       6,441       (654,390 )     -  
                                         
Stockholders’ Equity
    1,403,387       2,354,151       13,017       (2,367,168 )     1,403,387  
                                         
    $ 2,989,253     $ 3,642,839     $ 50,987     $ (3,164,499 )   $ 3,518,580  

 
29

 
TUTOR PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET - DECEMBER 31, 2011
(In Thousands)

   
Tutor Perini
 Corporation<