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MORRISON KNUDSEN ANNOUNCES THIRD-QUARTER LOSS; CHARGES FOR EXTRAORDINARY ITEM AND ACCOUNTING CHANGE

 MORRISON KNUDSEN ANNOUNCES THIRD-QUARTER LOSS;
 CHARGES FOR EXTRAORDINARY ITEM AND ACCOUNTING CHANGE
 BOISE, Idaho, Oct. 20 /PRNewswire/ -- Morrison Knudsen Corp. (MK) (NYSE: MRN) reported a third-quarter loss of $7.6 million, 26 cents per share, before extraordinary charge. As previously announced on Sept. 30, the third-quarter loss stems primarily from the provision for reserves on prison and underground contracts and a charge resulting from the write-off of costs associated with the Honolulu transit project.
 For the nine months ended Sept. 30, 1992, MK reported income, before debt redemption charges and the effect of the post-retirement health care accounting charge, of $5.3 million, 19 cents per share.
 Redemption of the Liquid Yield Option Notes (LYONs|TM~) on Sept. 30, 1992, resulted in an extraordinary after-tax charge of $3.1 million, 11 cents per share. The company's strong cash position enabled it to redeem the LYONs and thereby eliminate future interest charges associated with the debt and the potential for dilution of future per share earnings.
 The nine-month results also include a restatement of the first quarter of 1992 results of operations to give effect to an after-tax charge of $17.4 million, 61 cents per share, representing a required accounting change for the unfunded prior service cost obligation of post-retirement health care costs at Dec. 31, 1991.
 After the extraordinary charge and the cumulative effect of the accounting change for the three-month and nine-month periods ended Sept. 30, 1992, the net losses were $10.7 million, 37 cents per share, and $15.2 million, 53 cents per share, respectively.
 Net income for the comparable three-month and nine-month periods of 1991 were $11.1 million, 39 cents per share, and $29.3 million, $1.10 per share, respectively.
 "This debt redemption, the immediate recognition of the cumulative prior service cost of post-retirement health care, and the provision for reserves, have positioned MK for attractive earnings improvements for 1993 and beyond," said William J. Agee, MK chairman and chief executive officer.
 "More than $100 million of cash and cash equivalents, a backlog of $4.6 billion compared to $4.2 billion one year ago, and significant reductions in overhead set the stage for an outstanding 1993 for the company," Agee added.
 Morrison Knudsen Corp. is an international company serving the environmental, industrial process, power and transportation markets with complete development, design/engineering, construction, operating and financial services.
 MORRISON KNUDSEN CORP.
 FINANCIAL HIGHLIGHTS
 (Dollars in thousands dollars except per-share data)
 Three Months Nine Months
 Ended Sept. 30: 1992 1991(A) 1992 1991(A)
 Revenue:
 Engineering
 and construction $522,359 $403,021 $1,440,389 $1,098,531
 Rail systems 50,720 123,639 145,030 354,620
 Total revenue $573,079 $526,660 $1,585,419 $1,453,151
 Operating income (loss):
 Engineering and
 construction $ (2,597) $ 10,756 $ 26,851 $ 43,917
 Rail systems 593 4,351 (1,360) 17,911
 Total operating
 income (loss) (2,004) 15,107 25,491 61,828
 Equity in and interest
 earned from McConnell
 Dowell and other
 affiliates 507 1,950 4,117 2,597
 Other income - net 2,574 14,093 19,977 27,298
 General and
 administrative expense (8,900) (9,924) (28,023) (31,508)
 Interest expense (3,889) (4,265) (11,657) (11,818)
 Income (loss) before
 income taxes, minority
 interests, extraordinary
 charge, and cumulative
 effect of accounting
 change (11,712) 16,961 9,905 48,397
 Income tax (expense)
 benefit(B) 4,216 (5,869) (4,517) (19,066)
 Minority interests in
 earnings of subsidiaries (74) -- (74) --
 Income (loss) before
 extraordinary charge and
 cumulative effect of
 accounting change (7,570) 11,092 5,314 29,331
 Extraordinary charge from
 write-off of unamortized
 debt issue cost(C) (3,096) -- (3,096) --
 Cumulative effect of
 accounting change for
 post-retirement
 health care costs(D) -- -- (17,403) --
 Net income (loss) $(10,666) $ 11,092 $ (15,185) $ 29,331
 Earnings (loss)
 per common share(E):
 Primary:
 Income (loss) before
 extraordinary charge
 and cumulative effect
 of accounting change $ (0.26) $ 0.39 $ 0.19 $ 1.10
 Extraordinary charge (0.11) -- (0.11) --
 Cumulative effect of
 accounting change -- -- (0.61) --
 Net income (loss) $ (0.37) $ 0.39 $ (0.53) $ 1.10
 Fully diluted(F) -- $ 0.38 -- $ 1.07
 New business booked
 in period:
 Engineering and
 construction $517,600 $605,600 $1,111,600 $1,681,400
 Rail systems(G) (17,800) 44,400 831,100 96,300
 Total new business $499,800 $650,000 $1,942,700 $1,777,700
 Backlog at Sept. 30: 1992 1991
 Engineering and construction $3,516,900 $3,813,600
 Rail systems 1,090,400 435,000
 Total backlog $4,607,300 $4,248,600
 (A) Restated to include the results of operations of a business acquired in October 1991 accounted for as a pooling-of-interests.
 (B) The income tax benefit for the three months ended Sept. 30, 1992, and the income tax expense for the nine months ended Sept. 30, 1992, reflects contract losses incurred for which the corporation will receive no state tax benefit.
 (C) The extraordinary charge represents the unamortized issue costs (net of tax) of the Liquid Yield Option Notes redeemed on Sept. 30, 1992.
 (D) The corporation changed to the accrual method of accounting for post-retirement health care costs effective Jan. 1, 1992. The cumulative after-tax effect of the change on prior years, representing unfunded prior service cost at Dec. 31, 1991, is recognized in the income statement at the beginning of the year.
 (E) Earnings-per-share data have been restated for all periods presented to reflect the two-for-one stock split in May 1992.
 (F) The redemption of the 7.25-percent convertible Liquid Yield Option Notes on Sept. 30, 1992, eliminated the potential for any material dilution and, therefore, no fully diluted earnings per common share are reported for 1992.
 (G) The reduction in new business in rail systems for the three months ended Sept. 30, 1992, represents a reduction in scope of a contract with the Australian National Railroad.
 -0- 10/20/92
 /CONTACT: Brent Brandon of Morrison Knudsen, 208-386-5387/
 (MRN) CO: Morrison Knudsen Corp. ST: Idaho IN: CST TRN SU: ERN


LM -- SE008 -- 2403 10/20/92 14:31 EDT
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Date:Oct 20, 1992
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