I. 1. a) List of largest completed jobs and related gross profit results Audited or reviewed fiscal year end statement Status of contracts completed Status of contracts in progress Letters of recommendation from owners, architects and engineers (Schedule of general and administrative expenses) Resumes of key employees Statement of Cash Flow Personal Financial Statement Bank Reference b) 3 5 Working Capital Net Worth 1 Total Current AssetsUnbilled Work Other Receivables Inventories JV Investments & Advances to Construction Joint Ventures Deferred Income Tax 1 SAA
NASBP National Association of Surety Bond Producers Notes Receivable Unbilled Amounts on Completed Contracts Prepaid Expenses and Other Current Assets Intangible Assets Good Will 10 5 10 10 2 2 SAA
Balance Sheet 1997 1998 1999 2000 2001 Current assets: Cash & cash equivalents 3,714,385 4,336,145 3,888,485 3,143,088 4,415,296 Marketable securities & short-term investment 753,201 904,976 433,298 445,952 571,063 Receivables: Contract receivables currently due 9,015,921 12,017,327 6,530,574 8,770,176 10,338,676 Retainages on contracts 2,278,462 3,044,383 1,902,012 2,206,072 3,093,791 Unbilled work 706,403 675,884 250,557 179,099 355,082 Other receivables 1,486,770 255,633 698,056 649,500 798,961 Less allowance for doubtful accounts 135,761 803,388 73,693 102,414 107,226 Total receivables, net 13,351,795 15,189,839 9,307,506 11,702,433 14,479,284 Inventories 1,049,561 655,882 753,174 814,378 1,339,983 Costs & recognized earnings in excess of billings on 2,881,512 4,025,563 1,156,049 1,573,811 2,444,006 uncompleted contracts Investments in & advances to construction joint ventures 605,607 518,180 152,612 210,791 319,881 Income taxes: Current/refundable 149,788 188,605 29,978 19,905 98,821 Deferred 420,523 449,785 99,332 106,166 270,411 Other current assets 1,124,698 1,628,996 857,723 14,568 1,147,209 Total current assets 24,051,070 27,897,971 16,678,158 18,831,091 25,085,953 Property, plant & equipment 21,060,765 25,343,488 18,202,471 21,829,585 27,102,841 Less accumulated depreciation 11,321,263 15,582,456 10,931,167 11,810,913 14,664,817 Property, plant & equipment, net 9,739,502 9,761,032 7,271,305 10,018,673 12,438,024 Noncurrent assets: Long-term investments 1,099,835 487,305 182,010 97,662 110,079 Deferred income taxes 222,371 347,185 61,793 23,391 63,529 Other assets 3,133,932 3,894,780 1,456,034 2,061,202 3,081,881 total noncurrent assets 14,195,640 14,490,302 8,971,142 12,200,928 15,693,513 Intangible assets N/A N/A N/A N/A N/A Total assets 38,246,710 42,388,273 25,649,299 31,032,019 40,779,466 CFMA Construction Financial Management Association
Balance Sheet 1997 1998 1999 2000 2001 Current liabilities: Current maturity on long-term deb 657,225 931,137 766,201 971,801 1,278,894 Notes payable & lines of credit 834,503 276,486 503,907 490,249 832,220 Accounts payable: Trade, including currently due to subcontractors 4,965,755 8,212,199 3,839,375 4,720,573 6,384,892 Subcontractor retainages 752,418 1,122,088 594,871 763,822 945,266 Other 298,830 106,133 536,073 365,669 368,151 Total accounts payable 6,017,003 9,440,420 4,970,319 5,850,064 7,698,309 Accrued expenses 2,633,540 3,399,267 1,158,733 1,890,236 2,013,415 Billings in excess of costs & recognized earnings on 3,485,501 4,743,799 2,070,224 2,200,037 3,287,241 uncompleted contracts Income taxes: Current 253,930 169,907 159,390 246,516 100,815 Deferred 23,988 59,461 39,909 39,452 137,008 Total income taxes 277,918 229,368 199,299 285,968 237,823 Other current liabilities 3,130,628 974,128 544,924 655,869 1,105,965 Total current liabilities 17,036,318 19,994,605 10,213,606 12,344,224 16,453,868 Long-term debt, excluding current maturities 4,341,101 3,953,622 3,418,661 4,288,936 6,531,498 Deferred income taxes 664,299 550,371 335,302 404,506 468,713 Other 1,525,756 1,588,613 927,769 534,910 1,236,946 Minority interests 22,815 46,829 36,233 60,448 43,227 Subtotal 6,553,971 6,139,435 4,717,965 5,288,800 8,280,384 Total liabilities 23,590,289 26,134,040 14,931,572 17,633,025 24,734,251 Net worth: Common stock, par value 509,438 466,611 235,689 207,359 299,447 Preferred stock, stated value 427,008 400,249 14,391 26,649 129,888 Additional paid-in capital 2,722,959 3,418,254 1,459,871 3,158,262 3,724,588 Retained earnings 10,038,925 11,208,116 8,234,914 10,186,266 11,960,519 Treasury stock 462,905 441,910 244,908 892,632 1,017,238 Excess value of marketable securities 361,490 43,202 13,830 7,664 9,699 Other equity 1,059,506 1,159,711 1,030,600 705,427 928,310 Total net worth 14,656,421 16,254,233 10,717,728 13,398,994 16,045,214 CFMA Total liabilities & net worth 38,246,710 42,388,273 25,649,299 31,032,019 40,779,466
1997 1998 1999 2000 2001 Total Current Assets $24,051,070 $27,897,971 $16,678,158 $18,831,091 $25,085,953 Unbilled Work) -$706,403 -$675,884 -$250,557 -$179,099 -$355,082 Other Receivables) -$1,486,770 -$255,633 -$698,056 -$649,500 -$798,961 Inventories) -$1,049,561 -$655,882 -$753,174 -$814,378 -$1,339,983 JVInvestments in & advances to construction joint -$605,607 -$518,180 -$152,612 -$210,791 -$319,881 ventures (Deferred Income Tax) -$420,523 -$449,785 -$99,332 -$106,166 -$270,411 (Real Current Assets) $19,784,203 $25,344,605 $14,726,426 $16,873,157 $22,003,636 Total Current Liabilities $17,036,318 $19,994,605 $10,213,606 $12,344,224 $16,453,868 Working Capital $2,747,885 $5,350,000 $4,512,820 $4,528,933 $5,549,768 Total Net Worth $14,656,421 $16,254,233 $10,717,728 $13,398,994 $16,045,214 Intangible Assets) N/A N/A N/A N/A N/A Real Net Worth $14,656,421 $16,254,233 $10,717,728 $13,398,994 $16,045,214 Total Workload 10 $27,478,850 $53,500,000 $45,128,200 $45,289,330 $55,497,680 5 $73,282,105 $81,271,165 $53,588,640 $66,994,970 $80,226,070 c) 3 Backlog Debt to Net WorthGross Margin 3
to Revenue 4 Total Workload 1 Credit of Single Contract 25.0 20.0 15.0 10.0 5.0 0.0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 CFMA 1. = / 2. NASBP 5 10 4 NASBP Surety School 2002 10
40.0 30.0 20.0 10.0 0.0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 CFMA 1. = / 2. NASBP 10 20 d) 1 1 3 5 e) NAICS 5 (North American Industry Classification System) 5 1997 NAICS SIC(Standard Industrial Classification) NAICS SIC
2. 1 1 100 2003 8 Status of contracts in progress 90 2003 9 70 2003 10 20 2003 11 70 6 100 2003 8 Status of contracts in progress 90 2003 10 85 2003 10 20 85 80 7 6 7 Marsh Inc.
8 3 9 8 SAA 9
: : : : ABC INC 4/1/ : 5% : $4,500,000 : : : : : : 18 $1,750 1 : $2,000,000 : $500,000 $425,000 $800,000 $725,000 : NASBP Surety School
3. a) 10 10 2 3 % % 11 GSA General Services Administration 12 7 3 Bid Results Form Bonding Capacity b) 10 Willis 11 SAA 12 2003 2
4. a) Status of contracts in progress 1. Contract Price Including Approve Change Orders 2. Contractor s Estimated Cost at Time of Bid 3. Total Amount Billing to Date Including Retaining 4. Total Costs to Date 5. Revised Estimated Remaining Costs to Complete Income Analysis 6. Revised Total Costs 4 5 7. Original Estimated Gross Profit 1 2 8. Revised Gross Profit/Loss 1 6 9. Excess Billings Over Costs 3 4 10. Excess Costs Over Billings 4 3 11. % of Completion Cost/Cost 4 6 12. Gross Revenue Earned 1 11 13. Gross Profit Earned 12 4 14. Costs & Earnings in Excess of Billings 12 3 15. Billings in Excess of Costs & Earnings 3 12 CFMA Construction Financial Management Association ENR Engineering News-Record 100 65
50 32 13 14 15 3 1 3 100 100 80 Status report Status report 13 1987 (SIC(Standard Industrial Classification)) Highway and Street, Except Elevated Highways(1611) Bridge, Tunnel, and Elevated Highway(1622) Water, Sewer, Pipeline, and Communications, Power Line(1623) Heavy (1629)1997 (NAIC(North American Industrial Classification)) Highway and Street(23411) Bridge and Tunnel(23412) Water, Sewer and Pipeline(23491) Power and Communication Transmission Line(23492) Industrial Non-Building Structure(23493) All Other Heavy(234999) 14 1987 (SIC(Standard Industrial Classification)) Industrial Buildings and Warehouses(1541) Nonresidential Buildings(1542)1997 (NAIC(North American Industrial Classification)) Commercial and Institutional Building(23332) Manufacturing and Light Industrial Building, Except Warehouse(23331) 15 1987 (SIC(Standard Industrial Classification)) Plumbing, Heating, and Air-Conditioning(1711) Painting and Paper hanging(1721) 1731, 1741~1743, 1751~1752, 1761, 1771, 1781, 1791, 1793~1796, 1799 1997 (NAIC(North American Industrial Classification)) Plumbing, Heating, and Air-Conditioning(23511) Painting and Wall Covering(23521) Security Systems Services, Except Locksmiths(561621) 23531, 23541~23543, 23551~23552, 23561, 23571, 23581, 23591~23595
ABC 1 2 3 4 5 1 2 1. ABC Mart 600 500 300 400 250 2. XYZ Office 1,500 1,300 1,000 800 300 3. UFO Hotel 800 700 600 500 50 4. Japan Office 2,000 1,500 900 300 1,500 5. DC Bar 900 300 400 500 500 6. 7. 8. 9. 10. Totals 5,800 4,300 3,200 2,500 2,600 1 1. 2. NASBP Surety School
ABC 6 7 8 9 10 11 12 13 14 15 (4+5) (1-2) (4 6 (1 11 (12-3) (1-6) (3-4) (4-3) (12-4) (3-12) 1. 650 100-50 100 62% 369-31 69 2. 1,100 200 400 200 73% 1,091 291 91 3. 550 100 250 100 91% 727 227 127 4. 1,800 500 200 600 17% 333 33 567 5. 1,000 600-100 100 50% 450-50 50 6. 7. 8. 9. 10. Totals 5,100 1,500 700 900 200 2,971 471 337 567 Remarks: NASBP Surety School
500.0% 400.0% 300.0% 200.0% 100.0% 0.0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 CFMA 1. =( Billings in excess of costs & recognized earnings on uncompleted contracts ( )/Costs & recognized earnings in excess of billings on uncompleted contracts( )) 100 2. 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 1. =( / ) 100 2. 3 80 20 50
b) General Indemnity Agreement Email 2 c) 2001 9 11 2002 69.9 2,454 52.7 2002 3,153 21.0% NIAB The Council of Insurance Agents & Brokers 2003 2 80 2003 3 70 2003 Letter of Credit 16 16 AON Inc.
4,000 3,500 80.0% 70.0% 3,000 2,500 2,000 1,500 1,000 500 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 0.0% Top 100 Writers of Surety Bonds 2002 Twelve-Year Experience Summaries 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Up 100 Up 50 100 Up 30 50 Up 20 30 Up 10 20 U 1 10 Down 1 10 Down 10 20 Down 20 30 0% 2002 2002 2002 2003 2003 2003 2003 NIAB The Council of Insurance Agents & Brokers
5. Fund Administrator
$1 $1 $1 100 $900 $3 $5 $1 Lockton Insurance Broker, Inc.
II. 1. a) b) c) CPA Certified public accountant Substantive tests
2 2 17 Identification Agreement Bankruptcy Court 18 d) 17 SAA 18 AON Inc.
19 e) f) 20 SAA Surety Association of America 1993 1 21 125 22 19 2002 10 22 18 4 1 2 20 SAA 21 Bond Default Manual 22 2002 1US$= 125.39