**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 June 30, 2009

OR

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

For the transition period from _________ to _________

Commission File Number: 1-6314

***Tutor Perini Corporation***(Exact name of registrant as specified in its charter)

| MASSACHUSETTS                                                   | 04-1717070                            |
|-----------------------------------------------------------------|---------------------------------------|
| (State or other jurisdiction of

incorporation or organization) | (I.R.S. Employer

Identification No.) |

15901 OLDEN STREET, SYLMAR, CALIFORNIA 91342-1093(Address of principal executive offices)        (Zip code)

(818) 362-8391        (Registrant's telephone number, including area code)                  PERINI CORPORATION        73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160        (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 ___

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 ___   No ___

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 X | Accelerated filer ___ | Non-Accelerated filer ____ | Smaller reporting company ____ |
|---------------------------|-----------------------|----------------------------|--------------------------------|

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ NoX 

The number of shares of Common Stock, $1.00 par value per share, of the registrant outstanding at August 3, 2009 was 48,531,482.

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     **TUTOR****PERINI C****ORPORATION AND SUBSIDIARIES**

**     INDEX**

|           |                       |                                                                                                                            | **Page Number** |
|----------------|----------------------------|---------------------------------------------------------------------------------------------------------------------------------|-----------------|
| **Part I. -**  | **Financial Information:** |                                                                                                                            |
|           |                       |                                                                                                                            |            |
|           | Item 1.                    | Financial Statements (Unaudited)                                                                                                |            |
|           |                       |                                                                                                                            |            |
|           |                       | Consolidated Condensed Balance Sheets –                     June 30, 2009 and December 31, 2008                           | 3               |
|           |                       |                                                                                                                            |            |
|           |                       | Consolidated Condensed Statements of Income –                    Three Months and Six Months ended June 30, 2009 and 2008 | 4               |
|           |                       |                                                                                                                            |            |
|           |                       | Consolidated Condensed Statement of Stockholders’ Equity –                     Six Months ended June 30, 2009       | 5               |
|           |                       |                                                                                                                            |            |
|           |                       | Consolidated Condensed Statements of Cash Flows –                    Six Months ended June 30, 2009 and 2008              | 6               |
|           |                       |                                                                                                                            |            |
|           |                       | Notes to Consolidated Condensed Financial Statements                                                                            | 7 – 21    |
|           |                       |                                                                                                                            |            |
|           | Item 2.                    | Management's Discussion and Analysis of Financial Condition and Results of Operations                                           | 22 – 31   |
|           |                       |                                                                                                                            |            |
|           | Item 3.                    | Quantitative and Qualitative Disclosures About Market Risk                                                                      | 31              |
|           |                       |                                                                                                                            |            |
|           | Item 4.                    | Controls and Procedures                                                                                                         | 31              |
|           |                       |                                                                                                                            |            |
| **Part II. -** | **Other Information:**     |                                                                                                                            |
|           |                       |                                                                                                                            |            |
|           | Item 1.                    | Legal Proceedings                                                                                                               | 32              |
|           |                       |                                                                                                                            |            |
|           | Item 1A.                   | Risk Factors                                                                                                                    | 33              |
|           |                       |                                                                                                                            |            |
|           | Item 2.                    | Unregistered Sales of Equity Securities and Use of Proceeds                                                                     | 33              |
|           |                       |                                                                                                                            |            |
|           | Item 3.                    | Defaults Upon Senior Securities                                                                                                 | 33              |
|           |                       |                                                                                                                            |            |
|           | Item 4.                    | Submission of Matters to a Vote of Security Holders                                                                             | 33 – 34   |
|           |                       |                                                                                                                            |            |
|           | Item 5.                    | Other Information                                                                                                               | 34              |
|           |                       |                                                                                                                            |            |
|           | Item 6.                    | Exhibits                                                                                                                        | 34 – 35   |
|           |                       |                                                                                                                            |            |
|           | Signatures                 | 36                                                                                                                              |

2

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**Part I. – Financial Information**

Item 1. Financial Statements (Unaudited)

**TUTOR****PERINI CORPORATION AND SUBSIDIARIES        CONSOLI****DATED CONDENSED BALANCE SHEETS**

**JUNE 30, 2009****(UNAUDITED) AND DECEMBER 31, 200****8        (In Thousands)**

|                                                                                       | **JUNE**** ****30,**                                                     |   | **DEC.**** ****31,**                                          |
|--------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                                       | **2009**                                                                      |   | **2008**                                                           |
| **ASSETS**                                                                                 |                                                                          |   |                                                               |
| Cash and Cash Equivalents                                              |  $    450,921                                   |   |  $    386,172                        |
| Accounts Receivable, including retainage                                    |     1,366,614                                        |   |     1,378,040                             |
| Costs and Estimated Earnings in Excess of Billings      |        122,500                        |   |        115,706             |
| Deferred Income Taxes                                                            |            7,606  |   |          11,589  |
| Other Current Assets                                                             |          16,112             |   |          18,793  |
|      Total Current Assets                               |     1,963,753                                        |   |     1,910,300                             |
|                                                                                       |                                                                          |   |                                                               |
| Long-term Investments                                                            |        101,201                        |   |        104,779             |
|                                                                                       |                                                                          |   |                                                               |
| Property and Equipment, less Accumulated Depreciation             |                                                                          |   |                                                               |
| of $57,454 in 2009 and $47,116 in 2008             |        337,987                        |   |        328,480             |
|                                                                                       |                                                                          |   |                                                               |
| Other Assets:                                                                         |                                                                          |   |                                                               |
|   Goodwill                                                                  |        602,471                        |   |        588,112             |
|   Intangible Assets, net                                               |        140,887                        |   |        125,026             |
|   Other                                                                          |          17,071             |   |          16,381  |
|                                                                                       |  $ 3,163,370                                                   |   |  $ 3,073,078                                        |
|                                                                                       |                                                                          |   |                                                               |
| **LIABILITIES**** ****AND**** ****STOCKHOLDERS’**** ****EQUITY**      |                                                                          |   |                                                               |
| Current Maturities of Long-term Debt                              |  $      22,215                        |   |  $      18,674             |
| Accounts Payable, including retainage                                       |     1,257,425                                        |   |     1,352,041                             |
| Billings in Excess of Costs and Estimated Earnings      |        210,489                        |   |        192,442             |
| Accrued Expenses                                                                      |        115,547                        |   |        122,094             |
|      Total Current Liabilities                          |     1,605,676                                        |   |     1,685,251                             |
|                                                                                       |                                                                          |   |                                                               |
| Long-term Debt, less current maturities included above  |        186,436                        |   |          61,580  |
|                                                                                       |                                                                          |   |                                                               |
| Deferred Income Taxes                                                            |          90,304             |   |          98,862  |
|                                                                                       |                                                                          |   |                                                               |
| Other Long-term Liabilities                                                      |          61,316             |   |          89,159  |
|                                                                                       |                                                                          |   |                                                               |
| Contingencies and Commitments                                               |                                                                          |   |                                                               |
|                                                                                       |                                                                          |   |                                                               |
| Stockholders’ Equity:                                                           |                                                                          |   |                                                               |
|   Common Stock                                                         |          48,531             |   |          48,319  |
|   Additional Paid-in Capital                                      |     1,004,763                                        |   |     1,001,392                             |
|   Retained Earnings                                                         |        200,938                        |   |        123,060             |
|   Accumulated Other Comprehensive Loss                            |        (34,594)                            |   |        (34,545)                 |
|      Total Stockholders' Equity                         |     1,219,638                                        |   |     1,138,226                             |
|                                                                                       |                                                                          |   |                                                               |
|                                                                                       |  $ 3,163,370                                                   |   |  $ 3,073,078                                        |

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

 

3

 

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**TUTOR****PERINI CORPORATION AND SUBSIDIARIES        CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)****(In Thousands, Except Per Share Data)**

|                                                                                | **THREE**** ****MONTHS**                                                                 |   | **SIX**** ****MONTHS**                                                                   |
|-------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                                                | **ENDED**** ****JUNE**** ****30,**                                                  |   | ** ENDED**** ****JUNE**** ****30,**                                            |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
|                                                                                | **2009**                                                                                      |   | **2008**                                                                                      |   | **2009** |   | **2008** |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Revenues                                                                       |  $ 1,382,748                                                                   |   |  $ 1,388,387                                                                   |   |  $  2,901,030  |   |  $ 2,644,723  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Cost of Operations                                                        |     1,274,535                                                        |   |     1,317,389                                                        |   |      2,685,907  |   |     2,507,163  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Gross Profit                                                                   |        108,213                                        |   |          70,998                             |   |         215,123  |   |        137,560  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| General and Administrative Expenses                             |          44,453                             |   |          28,398                             |   |           88,729  |   |          55,997  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| **INCOME**** ****FROM**** ****CONSTRUCTION**** ****OPERATIONS**      | **         ****63,760**** **                |   | **         ****42,600**** **                |   | **        ****126,394**** ** |   | **         ****81,563**** ** |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Other Income, net                                                         |               619  |   |            2,535                  |   |             1,885  |   |            4,040  |
| Interest Expense                                                               |          (2,864)                                 |   |             (394)                 |   |            (4,094) |   |             (749) |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Income before Income Taxes                                           |          61,515                             |   |          44,741                             |   |         124,185  |   |          84,854  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| Provision for Income Taxes                                           |        (22,618)                                            |   |        (16,184)                                            |   |          (46,307) |   |        (31,144) |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| **NET**** ****INCOME**                                                         | ** ****$****      ****38,897**** **                   |   | ** ****$****      ****28,557**** **                   |   | ** ****$****       ****77,878**** ** |   | ** ****$****      ****53,710**** ** |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| BASIC EARNINGS PER COMMON SHARE                            |  $          0.80                  |   |  $          1.05                  |   |  $           1.61  |   |  $          1.98  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| DILUTED EARNINGS PER COMMON SHARE                          |  $          0.79                  |   |  $          1.03                  |   |  $           1.59  |   |  $          1.94  |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
|                                                                                |                                                                                          |   |                                                                                          |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                     |                                                                                          |   |                                                                                          |   |   |   |   |
| BASIC                                                                               |          48,521                             |   |          27,171                             |   |           48,518  |   |          27,158  |
| Effect of Dilutive Stock Options and Restricted  |                                                                                          |   |                                                                                          |   |   |   |   |
|   Stock Units Outstanding                                       |               476  |   |               596  |   |                490  |   |               552  |
| DILUTED                                                                             |          48,997                             |   |          27,767                             |   |           49,008  |   |          27,710  |

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

4

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**TUTOR PERINI CORPORATION AND SUBSIDIARIES        CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)        FOR THE SIX MONTHS ENDED JUNE 30, 2009        (In Thousands)**

|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   | **Accumulated**                                                                                                                                                                 |   |                                                                                          |
|----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                                 |                                                                                              |   | **Additional**                                                                                                            |   |                                                                                                    |   | **Other**** **                                                                                                                                                             |   |                                                                                          |
|                                                                 | **Common**                                                                                        |   | **Paid-in**                                                                                                               |   | **Retained**                                                                                            |   | **Comprehensive**                                                                                                                                                               |   |                                                                                          |
|                                                                 | **Stock**                                                                                         |   | **Capital**                                                                                                               |   | **Earnings**                                                                                            |   | **Loss**                                                                                                                                                                        |   | **Total**                                                                                     |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Balance - December 31, 2008                      |  $  48,319                                                                    |   |  $ 1,001,392                                                                                               |   |  $ 123,060                                                                               |   |  $              (34,545)                                                                             |   |  $ 1,138,226                                                                   |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Net income                                                      |                -  |   |                    -  |   |       77,878                                                         |   |                             -  |   |          77,878                             |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Other comprehensive loss:                                  |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
|      Foreign currency translation |                -  |   |                    -  |   |                 -  |   |                         (49)                            |   |               (49)      |
| Total comprehensive income                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |          77,829                             |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Tax effect of stock-based compensation           |                -  |   |             (851)                                             |   |                 -  |   |                             -  |   |             (851)                 |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Stock-based compensation expense                      |                -  |   |            4,295                                              |   |                 -  |   |                             -  |   |            4,295                  |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Issuance of common stock, net                    |           212                              |   |               (73)                                  |   |                 -  |   |                             -  |   |               139  |
|                                                                 |                                                                                              |   |                                                                                                                      |   |                                                                                                    |   |                                                                                                                                                                            |   |                                                                                          |
| Balance - June 30, 2009                          |  $  48,531                                                                    |   |  $ 1,004,763                                                                                               |   |  $ 200,938                                                                               |   |  $              (34,594)                                                                             |   |  $ 1,219,638                                                                   |

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

5

          

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**TUTOR****PERINI CORPORATION AND SUBSIDIARIES        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)        FOR THE****SIX MONTHS ENDED JUNE 30, 2009 AND 2008        (In Thousands)**

|                                                                                                                                                   | **SIX**** ****MONTHS**                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                   | **ENDED**** ****JUNE**** ****30,**                                                                        |
|                                                                                                                                                   | **2009**                                                                                                            |   | **2008** |
| Cash Flows from Operating Activities:                                                                                              |                                                                                                                |   |   |
|   Net income                                                                                                                       |  $     77,878                                                                    |   |  $      53,710  |
|   Adjustments to reconcile net income to net cash from operating activities:               |                                                                                                                |   |   |
|        Depreciation and amortization                                                                      |         20,632                                                         |   |            5,174  |
|        Stock-based compensation expense                                                                   |           4,295                                              |   |            5,920  |
|        Adjustment of investments to fair value                                             |              (22)                                  |   |            2,667  |
|        Excess income tax benefit from stock-based compensation                        |                   -  |   |             (533) |
|        Deferred income taxes                                                                              |         (4,685)                                                             |   |               997  |
|        Loss (gain) on sale of equipment                                                    |              318                              |   |             (425) |
|        Loss on land held for sale                                                          |              169                              |   |               211  |
|        Other long-term liabilities                                                                        |       (34,025)                                                                        |   |            3,601  |
|        Cash from changes in other components of working capital   |     (105,118)                                                                                   |   |            1,542  |
|                                                                                                                                                   |                                                                                                                |   |   |
|     NET CASH (USED BY) PROVIDED FROM OPERATING ACTIVITIES                                       |  $   (40,558)                                                                                   |   |  $      72,864  |
|                                                                                                                                                   |                                                                                                                |   |   |
| Cash Flows from Investing Activities:                                                                                              |                                                                                                                |   |   |
|   Acquisition of Keating Building Corporation, net of cash balance acquired                     |  $     (6,900)                                                                        |   |  $                -  |
|   Acquisition of property and equipment                                                                                  |       (19,408)                                                                        |   |        (14,297) |
|   Proceeds from sale of property and equipment                                                                 |              992                              |   |            3,670  |
|   Investment in land held for sale                                                                                  |            (699)                                             |   |             (211) |
|   Deferred merger-related costs                                                                                                    |                   -  |   |          (4,805) |
|   Investment in available-for-sale securities, net                                                                       |           3,600                                              |   |      (104,750) |
|   Investment in other activities                                                                                              |              520                              |   |             (985) |
|                                                                                                                                                   |                                                                                                                |   |   |
|     NET CASH USED BY INVESTING ACTIVITIES                                                                 |  $   (21,895)                                                                                   |   |  $  (121,378) |
|                                                                                                                                                   |                                                                                                                |   |   |
| Cash Flows from Financing Activities:                                                                                              |                                                                                                                |   |   |
|   Proceeds from long-term debt                                                                                                |  $   138,182                                                                               |   |  $        9,238  |
|   Repayment of long-term debt                                                                                                 |       (10,602)                                                                        |   |          (3,303) |
|   Excess income tax benefit from stock-based compensation                                                      |                   -  |   |               533  |
|   Issuance of common stock and effect of cashless exercise                                           |              139                              |   |             (450) |
|   Deferred debt costs                                                                                                              |            (517)                                             |   |               (38) |
|                                                                                                                                                   |                                                                                                                |   |   |
|     NET CASH PROVIDED FROM FINANCING ACTIVITIES                                                           |  $   127,202                                                                               |   |  $        5,980  |
|                                                                                                                                                   |                                                                                                                |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                                |         64,749                                                         |   |        (42,534) |
| Cash and Cash Equivalents at Beginning of Year                                                                      |       386,172                                                                    |   |        459,188  |
|                                                                                                                                                   |                                                                                                                |   |   |
| Cash and Cash Equivalents at End of Period                                                                          |  $   450,921                                                                               |   |  $    416,654  |
|                                                                                                                                                   |                                                                                                                |   |   |
| Supplemental Disclosure of Cash Paid During the Period For:                                                    |                                                                                                                |   |   |
| Interest                                                                                                                                               |  $       4,136                                                         |   |  $           630  |
| Income taxes                                                                                                                                      |  $     44,335                                                                    |   |  $      38,201  |
|                                                                                                                                                   |                                                                                                                |   |   |
| Supplemental Disclosure of Non-cash Transactions:                                                                                  |                                                                                                                |   |   |
| Grant date fair value of common stock issued for services                                                 |  $       7,411                                                         |   |  $      12,485  |
| Property and equipment acquired through financing arrangements                                                           |  $          257                                         |   |  $                -  |

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

 

6

 

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**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 (formerly known as 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, 2008. 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 June 30, 2009 and December 31, 2008, results of operations for the three month and six month periods ended June 30, 2009 and 2008, and cash flows for the six month periods ended June 30, 2009 and 2008. The results of operations for the six months ended        June 30, 2009 may not be indicative of the results that may be expected for the year ending December 31, 2009 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. Subsequent events have been evaluated through the date of issuance of these financial        statements.

**(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, 2008. The Company has made no significant changes to these policies during 2009,        except as noted below.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”)No. 141(R), “Business Combinations,” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an        acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS No. 141(R) also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is        effective for the Company beginning January 1, 2009 and the Company applied the provisions of SFAS No. 141(R) to an acquisition completed inJanuary 2009 (see Note 3(a)).                   In February 2008, the FASB issued FASB Staff Position(“FSP”) No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which amends SFAS No. 157 by delaying its effective date by one year for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Therefore, the application of SFAS No. 157        relating to non-financial assets and non-financial liabilities of the Company was adopted on January 1, 2009. The adoption of SFAS No. 157 did not have a material impact on the Company’s financial statements.

 

7

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

 

**(2)        ****Significant Accounting Policies****(continued)**

In December 2008, the FASB issued FSPFAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP 132(R)-1”), which requires employers to disclose information about fair value measurements of plan assets that are similar to the disclosures        about fair value measurements required by SFAS No. 157, “Fair Value Measurements.” FSP 132(R)-1 will become effective for the Company’s 2009 annual financial statements. Since FSP 132(R)-1 only requires enhanced disclosures, the adoption of FSP 132(R)-1 will not have an impact on the Company’s financial statements.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value when the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions that are not Orderly”(“FSP 157-4”), which is effective for the Company for the        quarterly period beginning April 1, 2009. FSP 157-4 affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. FSP 157-4 provides guidance for estimating fair value when the volume and level of market activity for an asset or liability have significantly decreased and        determining whether a transaction was orderly. FSP 157-4 applies to all fair value measurements when appropriate. The Company adopted the provisions of FSP 157-4 as of April 1, 2009. The adoption of FSP 157-4 did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP 115-2”), which is effective for the Company for the quarterly period beginning April 1, 2009. FSP 115-2 amends existing guidance for determining whether another-than-temporary impairment of debt securities has occurred. Among other changes, the FASB replaced the existing requirement that an entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert (a) it does not have the intent to sell the security, and (b) it is more likely than not it will not have to sell the security before recovery of        its cost basis.The Company adopted the provisions of FSP 115-2 beginning April 1, 2009. The adoption of FSP 115-2 did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”(“FSP 107-1”), which is effective for the Company for the quarterly period beginning April 1, 2009. FSP 107-1 requires an entity to provide the annual        disclosures required by SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,”in its interim financial statements. The Company adopted the provisions of FSP 107-1 beginning April 1, 2009. Other than the required disclosures, the adoption of FSP 107-1 did not have amaterial impact on the Company’s financial statements. See Note 5 for        disclosure of fair value measurements.

**(3)**        **Merger and Acquisition**

 

**           *(a) Acquisition of Keating Building Corporation***

> 
OnJanuary 15, 2009, the Company completed its acquisition of all of the outstanding capital stock of Daniel J. Keating Construction Company, d/b/a Keating Building Corporation (“Keating”), a privately held construction, construction management and design/build            company based in Philadelphia, PA. Under the terms of the transaction, the Company acquired 100% of Keating’s stock for total consideration of $51.1 million, which includes amounts paid at or subsequent to 

 

8

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

 

**(3)**      **Merger and Acquisition****(continued)**

> 
***(a)  Acquistion of Keating Building Corporation* (continued)**

closing and additional consideration that may become payable under the terms of the agreement. Goodwill of $14.3 million was recorded in conjunction with this acquisition.The Company has not yet completed the final allocation of the purchase price to the tangible and intangible assets of Keating. Pending the outcome of further analysis, the preliminary            purchase price allocation could change.

Keating provides building construction general contracting services primarily in the northeast and mid-Atlantic regions of the United States and has a history of successfully completed projects in the corporate campus, gaming, hospitality, education, pharmaceutical and institutional building construction markets. Keating was acquired because the Company believes Keating is a            strong strategic fit enabling the Company to expand its building construction market presence in the eastern half of the United States, including the important northeast and mid-Atlantic regions, and to realize significant synergies from the acquisition by deploying Keating’s resources in the regional private non-residential and public works building markets in the eastern United States.

The acquisition was effective as of January 1, 2009 for accounting purposes and, accordingly, Keating’s financial results are included in the Company’s consolidated results of operations and financial position beginning January 1, 2009. The acquisition of Keating did not have a material effect on the Company’s results of operations, financial condition or cash            flows.

** (b) *Merger With Tutor-Saliba Corporation***

> 
On September 8, 2008, the Company acquired all of the outstanding shares of Tutor-Saliba Corporation (“Tutor-Saliba”). Tutor-Saliba was acquired because the Company believes it is a strong strategic fit, providing the Company with enhanced opportunities for growth not available to the Company on a stand-alone basis through increased size, scale and management capabilities, complementary assets and expertise, particularly            Tutor-Saliba’s expertise in civil projects, immediate access to multiple geographic regions, and increased ability to compete for larger numbers of projects particularly in the civil construction segment due to an increased bonding capacity. 

The transaction was accounted for using the purchase method of accounting in accordance with SFAS No. 141, “Business Combinations.” The Company has not yet completed the process of finalizing the allocation of the purchase price to the tangible and intangible assets of Tutor-Saliba. However, during the six months ended June 30, 2009, the Company did not revise any of the assumptions, estimates or amounts            used to complete its preliminary purchase price accounting as of December 31, 2008. Pending the outcome of further analysis, the preliminary purchase price allocation could change.                           The following unaudited pro forma summary financial information presents the operating results of the combined company assuming that the merger occurred on January 1, 2007. 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, 2007, or of future results.

 

9

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(3)**      **Merger and Acquisition****(continued)**

** (b)*****Merger With Tutor-Saliba Corporation*****(continued)**

|                                               | **Three**** ****Months**** ****Ended**                  |   | **Six**** ****Months**** ****Ended**                    |
|----------------------------------------------------|-------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                               | **June**** ****30,**** ****2008**                       |   | **June**** ****30,**** ****2008**                       |
|                                               | **Actual**                                                        |   | **Pro**** ****forma**                                        |   | **Actual** |   | **Pro**** ****forma** |
|                                               | (in thousands, except per share amounts) |
|                                               |                                                              |   |                                                              |   |   |   |   |
| Revenues                                           |  $1,388,387                                             |   |  $1,802,391                                             |   |  $2,644,723  |   |  $3,442,577  |
| Income from construction operations |        42,600             |   |        66,414             |   |        81,563  |   |      127,051  |
| Net income                                    |        28,557             |   |        42,481             |   |        53,710  |   |        81,007  |
|                                               |                                                              |   |                                                              |   |   |   |   |
| Earnings per share:                      |                                                              |   |                                                              |   |   |   |   |
|    Basic                            |  $        1.05  |   |  $        0.85  |   |  $        1.98  |   |  $        1.62  |
|    Diluted                          |  $        1.03  |   |  $        0.84  |   |  $        1.94  |   |  $        1.60  |
|                                               |                                                              |   |                                                              |   |   |   |   |
| Weighted average sharesoutstanding:      |                                                              |   |                                                              |   |   |   |   |
|    Basic                            |        27,171             |   |        50,158             |   |        27,158  |   |        50,145  |
|    Diluted                          |        27,767             |   |        50,754             |   |        27,710  |   |        50,697  |

**(c) *Goodwill and Other Intangible Assets***

 

Changes in the carrying amount of goodwill during the six months ended June 30, 2009are as follows (in thousands):

|                                                              |                                       |   |                                                                            |   | **Management**                                                                                                |   |                                       |
|-------------------------------------------------------------------|--------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|
|                                                              | **Building**                               |   | **Civil**                                                                       |   | **Services**                                                                                                  |   | **Total**                                  |
| Gross goodwill – December 31, 2008 | $ 605,314                             |   |  $ 83,163                                                             |   | $      66,533                                                                   |   | $755,010                                   |
| Accumulated impairment                                  |   (146,847)                      |   |              - |   |        (20,051)                                                            |   |  (166,898)                            |
| Balance - December 31, 2008                   |    458,467             |   |     83,163                                             |   |         46,482                                                   |   |   588,112                   |
| Goodwill recorded in connectionwith                |                                       |   |                                                                            |   |                                                                                                          |   |                                       |
|   the acquisition of Keating        |      14,359  |   |             -  |   |                  -  |   |      14,359  |
| Balance - June 30, 2009                       |  $472,826                        |   |  $ 83,163                                                        |   | $      46,482                                                              |   |  $602,471                        |

> 
Other intangible assets consist of the following (in thousands):

|                                    | **As of December 31, 2008**          |
|-----------------------------------------|--------------------------------------|
|                                    | **Gross**                            |   |   |   | **Net** |
|                                    | ** Carrying**                   |   | **Accumulated** |   | **Carrying** |
|                                    | **Amount**                           |   | **Amortization** |   | **Value** |
| Trade names                        | $  83,450                       |   | $          - |   | $ 83,450 |
| Contractor license                 |       5,320 |   |             - |   | 5,320 |
| Customer relationships             |     26,700            |   |      (1,373) |   | 25,327 |
| Construction contract backlog |     25,040            |   |     (14,951) |   | 10,089 |
| Non-compete agreements             |       2,400 |   |       (1,560) |   | 840 |
| Total                                   | $ 142,910                            |   | $  (17,884) |   | $125,026 |

|                                    | **As of June 30, 2009**              |
|-----------------------------------------|--------------------------------------|
|                                    | **Gross**                            |   |   |   | **Net** |
|                                    | ** Carrying**                   |   | **Accumulated** |   | **Carrying** |
|                                    | **Amount**                           |   | **Amortization** |   | **Value** |
| Trade names                        | $  96,150                       |   | $           - |   | $ 96,150 |
| Contractor license                 |       5,320 |   |              - |   | 5,320 |
| Customer relationships             |     31,700            |   |       (2,807) |   | 28,893 |
| Construction contract backlog |     33,340       |   |     (23,416) |   | 9,924 |
| Non-compete agreements             |       2,400 |   |       (1,800) |   | 600 |
| Total                                   | $ 168,910                            |   | $   (28,023) |   | $140,887 |

10

> 
****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(3)**      **Merger and Acquisition****(continued)**

> 
**(c)*****Goodwill and Other Intangible Assets*****(continued)**

> 
Amortization expense for the three months and six months ended June 30, 2009 was $4.9 million and $10.1 million, respectively. Amortization expense for the three months and six months ended June 30, 2008 was $0.2million and $0.4million, respectively. As of June 30, 2009, amortization expense is estimated to be $6.6million for the remainder of 2009, $7.8million in 2010, $3.3million in 2011, $2.9million in 2012, $2.9million in 2013 and $15.9million thereafter.

**(****4****)****      ****Cash and Cash        Equivalents**

 

**         ** Cash equivalents include short-term, highly liquid investments with original maturities of three months or less.

> 
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. Joint            venture cash and cash equivalents are not restricted to specific uses within those entities; however, the terms of the joint venture agreements limit the Company’s ability to distribute those funds and use them for corporate purposes. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash distribution            is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At June 30, 2009and December 31, 2008,cash and cash equivalents consisted of the following:

|                                                                                         | **June**** ****30,**                        |   | **Dec.**** ****31,**                         |
|----------------------------------------------------------------------------------------------|--------------------------------------------------|--------|---------------------------------------------------|
|                                                                                         | **2009**                                         |   | **2008**                                          |
|                                                                                         | (in thousands)                              |
| Corporate cash and cash equivalents (available                      |                                             |   |                                              |
|   for general corporate purposes)                                   |  $  434,992                  |   |  $  342,246                   |
|                                                                                         |                                             |   |                                              |
| Company's share of joint venture cash and                      |                                             |   |                                              |
|   cash equivalents (available only for joint venture |                                             |   |                                              |
|   purposes, including future distributions)                         |       15,929  |   |        43,926  |
|                                                                                         |  $  450,921                  |   |  $  386,172                   |

 

11

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(5)     ****Fair Value Measurements**

> 
SFAS No. 157,“Fair Value Measurements,” establishes a three-tier valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs used in measuring fair value. A financial asset or liability’s classification within the            hierarchy is determined based on the lowest level input that is significant to the fair value measurement. 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. 

 

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2009: 

|                                              |                                                                                                            |   | **Fair**** ****Value**** ****Measurements**** ****at**** ****June**** ****30,**** ****2009**** ****Using**           |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              |                                                                                                            |   |                                                                                                                                                    |   | **Significant**** ****other** |   | **Significant**** ** |
|                                              | **Total**** ****Carrying**                                                                                 |   | **Quoted**** ****prices**** ****in**                                                                                                          |   | **observable** |   | **unobservable** |
|                                              | **Value**** ****at**                                                                                       |   | **active**** ****markets**                                                                                                                         |   | **inputs** |   | **inputs** |
|                                              | **June**** ****30,**** ****2009**                                                                     |   | **(Level**** ****1)**                                                                                                                              |   | **(Level**** ****2)** |   | **(Level**** ****3)** |
|                                              | (in thousands)                                                                                             |
| Cash and cash equivalents (1) |  $        450,921                                             |   |  $           450,921                                                                   |   |  $                      -  |   |  $                 -  |
|                                              |                                                                                                            |   |                                                                                                                                                    |   |   |   |   |
| Short-term investments (2)              |                  100  |   |                     100                        |   |                          -  |   |                     -  |
|                                              |                                                                                                            |   |                                                                                                                                                    |   |   |   |   |
| Auction rate securities (3)        |                                                                                                            |   |                                                                                                                                                    |   |   |   |   |
| Long-term                                         |           101,201                                        |   |                         -  |   |                          -  |   |          101,201  |
|                                              |                                                                                                            |   |                                                                                                                                                    |   |   |   |   |
|      TOTAL               |  $        552,222                                             |   |  $           451,021                                                                   |   |  $                      -  |   |  $       101,201  |

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

|                                                                                                | **Auction**** ****Rate**                                                                            |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                                                                                                | **Securities**                                                                                           |
|                                                                                                | (in thousands)                                                                                      |
| Balance at December 31, 2008                                                    |  $     104,779                                                        |
| Settlements                                                                                         |           (3,600)                                      |
| Reversal of impairment charge included in other income, net |                 22  |
| Balance at June 30, 2009                                                        |  $     101,201                                                        |

                              

|  | (1)      | Cash and cash equivalents 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. |
|--|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

12

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES******NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**(continued)

**(5)     ****Fair Value Measurements****(continued)**

|  | (2)      | Short-term investments consist of an S&P 500 index mutual fund for which fair value is determined through quoted market prices. |
|--|-----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

|  | (3)      | At June 30, 2009, the Company had $101.2million invested in auction rate securities (“ARS”) which the Company considers as available-for-sale. The majority of the ARS                    held by the Company at June 30, 2009, totaling $75.3million, are in securities collateralized by student loan portfolios, which are guaranteed by the United States government. Additional amounts totaling $17.9million, are invested in securities collateralized by student loan portfolios, which are privately insured. The                    remainder of the securities, totaling $8.0 million, are invested in tax-exempt bonds. Most of the Company’s ARS are rated AAA or 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) the underlying structure of each security; (ii) the present value of future principal and interest payments                    discounted at rates considered to reflect current market conditions; and (iii) consideration of the probabilities of default or repurchase at par for each period. |
|--|-----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Due to the Company’s belief that the market for both government-backed and privately insured student loans, as well as for tax exempt municipal bonds,may take in excess of twelve months to fully recover, the Company has classified its $101.2million investment in these securities as non-current and this amount is included in Long-term Investmentsin the Consolidated Condensed Balance Sheetsat June 30, 2009.          

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, long term-debt and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value.        

**(6)     ****Contingencies and Commitments**

***(a)  Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter***

Several months ago, the court heard an argument presented by the Tutor-Saliba-Perini joint venture (“TSP”) that the Los Angeles County Metropolitan Transportation Authority’s (“LAMTA”) Disadvantaged Business Enterprise (“DBE”) program was/is unconstitutional thus making LAMTA’s DBE claims unenforceable. In        March 2009, the court ruled that LAMTA could not proceed with its breach of contract claims unless it could prove the contracts are constitutional under a “strict scrutiny” standard. Thereafter, LAMTA informed the court it will drop the breach of contract claims. The court also ruled that LAMTA may proceed with a trial on its DBE false claims.                  The court has set the remainder of the case to be tried beginning on January 11, 2010, with six (6) weeks allotted to complete the trial. TSP intends to file dispositive motions to limit MTA’s claims and damages and the court has agreed to hear those motions early. Also, the court reiterated its desire that the parties mediate the case once more before any trial.          

***(b)  Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter ***

To date, the current Disputes Review Board panel (the “Third DRB”) has made three awards. The first is an award to the Perini/Kiewit/Cashman joint venture (“PKC”) in the amount of $50.7 million for delays, impacts and inefficiencies. Of that total award, $41.1 million was issued as a binding arbitration award, and the remaining $9.6        million was issued as a non-binding recommendation. The second award is in the amount of $5.8 million for delay damages. Of that amount, $3.3 million was issued as a binding arbitration award, and $2.5 million was issued as a non-binding recommendation. Massachusetts Highway Department (“MHD”) has appealed both of these 

13

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

 

         

**(6)     ****Contingencies and Commitments****(continued)**

***(b)  Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter * (continued)**awards. The Third DRB panel issued its third award as a binding arbitration award, denying PKC’s claim for further compensable delays. The time for appealing this award has not yet run. It is PKC’s position that the remaining claims to be decided by the DRB on a binding basis have an anticipated value of approximately $26 million. MHD disputes that the remaining claims before the DRB may be decided on a binding basis.  Hearings before the DRB are scheduled to occur throughout 2009 and into 2010.

***(c) Long Island Expressway/Cross Island Parkway******Matter***

On April 20, 2009, the Company made a presentation of its position to the New York State Department of Transportation (“NYSDOT”) regarding the additional relief it seeks from the NYSDOT. Settlement negotiations between the parties are continuing.

***(d) Gaylord Hotel and Convention Center***

The Perini/Tompkins Joint Venture has closed out most subcontracts. Resolution of the issues remaining with other subcontractors may require mediation and/or arbitration or trial. In March 2009, PTJV settled with two major subcontractors, Pierce Associates, Inc. and Banker Steel Company, LLC. A mediation with another major subcontractor,        MTR Electrical Construction, LLC, held in July 2009, did not result in a settlement. 

***(e) UCLA Westwood Replacement Hospital Matter***

Tutor-Saliba-Perini Joint Venture (“TSP”) has filed a lawsuit against The University of California at Los Angeles (“Owner”) on behalf of TSP and its subcontractors. TSP is seeking $36 million on behalf of itself and $171 million on behalf of its subcontractors. The Owner has filed a cross complaint against TSP,        the Company, Tutor Saliba Corporation, Helix Electric Inc., and others (together “Tutor Perini Defendants”) alleging contract breach and violation of the California False Claims Act. Helix Electric, Inc. (“Helix”) was a subcontractor to TSP. The Owner is seeking $62.2 million for contract breach from the Tutor Perini Defendants;        $4.3 million, trebled, for false claims from the Tutor Perini Defendants and Helix; and other relief. The subcontractors have filed lawsuits against TSP seeking the aforementioned $171 million in what are essentially pass-through claims to the Owner.

The global negotiations, originally scheduled for May 2009, didnot take place. The parties will complete necessary discovery in advance of any mediation, which has yet to be scheduled, in order to maximize their opportunity to achieve an acceptable resolution.                  All cases have been deemed related. A judge has been assigned. It is anticipated that all cases will be consolidated in August 2009. The court ordered limited informal discovery under “Mediation Privilege”; ordered the Owner to produce its records; granted TSP’s motion to lift the discovery stay with respect to third parties (e.g., Owner’s architect, construction manager and inspectors); and will allow limited depositions prior to mediation. The court indicated        it intends to personally manage the case and wants to steer it to settlement.         Management has made an estimate of the total net anticipated recovery on this project and it is included in revenues recorded to date. To the extent new facts become known or the final recovery included in the claim settlement varies from this estimate, the impact of the change will be reflected in the financial statements at that time.

 

14

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

*****(6)*     ****Contingencies and Commitments****(continued)****

***(f) Shareholder Litigation***

***(1) Isham and Rollman Securities Litigation Matters***

On February 9, 2009, the lead plaintiffs filed their consolidated amended complaint. The consolidated amended complaint repeats the allegations and counts from the initial complaints, and includes additional factual allegations regarding financial difficulties with the Cosmopolitan Resort & Casino        project in Las Vegas. Defendants filed motions to dismiss on April 17, 2009. Plaintiff’s opposition and Defendants’ reply brief have been filed. Parties are awaiting a hearing on these motions, which is expected to occur in late August or September. 

**(2)*****Adams Matter***

On January 28, 2009, an individual named Kathy Adams, who is allegedly a holder of the Company’s common stock, sent the Company’s board of directors a letter demanding that the board commence an investigation of potential claims against certain current or former officers and directors of the Company for alleged breaches of their        fiduciary duties owed to the Company, resulting from alleged failures to disclose purported problems with the Company’s Las Vegas construction projects.The Company’s board of directors has voted to form a Special Litigation Committee (“SLC”) to investigate Adams’ allegations. That action was communicated to Adams’        counsel on April 27, 2009. The SLC has retained an Independent Counsel (“IC”) to conduct the investigation. The IC’s investigation is underway.

Management does not anticipate any material adverse financial impact to result from these shareholder litigation matters.

 

**(****7****)****        ****Stock-Based        Compensation**

***(a) 2004 Stock Option and Incentive Plan***

The Company is authorized to grant up to 5,500,000 stock-based compensation awards to key executives, employees and directors of the Company under the 2004 Stock Option and Incentive Plan (the “Plan”). The Plan allows stock-based compensation awards to be granted in a variety of forms, including stock options,        stock appreciation rights, restricted stock awards, unrestricted stock awards, deferred stock awards and dividend equivalent rights. The terms and conditions of the awards granted are established by the compensation committee of the Company’s board of directors (the “Compensation Committee”), who also administers the Plan. 

During the second quarter of 2009, the Compensation Committee approved the award of both 750,000 restricted stock units and 750,000 stock options. Each of the awards will vest in five equal annual installments (or tranches) from 2010 through 2014, subject to the achievement of pre-tax income performance targets        established by the Compensation Committee. The Compensation Committee has established the pre-tax performance targets for the second half of fiscal year 2009, but has not yet established pre-tax performance targets for the fiscal years 2010 through 2013. Therefore, the grant dates for the last four tranches of the awards, totaling an aggregate of 1,200,000 shares, have not been established for accounting purposes and, accordingly, the grant date fair values of these tranches cannot be        determined currently. The grant dates for the last four tranches of the awards will be established in the future when the Compensation Committee establishes the respective pre-tax performance targetsfor each tranche. The grant date fair values of each tranche will be determined at that time and the related 

15

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(****7****)****               ****Stock-Based Compensation****(continued)**

 

** *           (a) 2004 Stock Option and Incentive Plan*****(continued)**

compensation expense for each tranche will be amortized over the separate requisite service period for each tranche.

For the three month and six month periodsended June30, 2009, the        Company recognized total compensation expense of $1.6 millionand $4.3 million, respectively,related to stock-based compensation awards which areincluded in “General and Administrative Expenses” in the Consolidated Condensed Statements of Income.        

A total of 504,278 shares of common stock are available for future grant under the Plan at June30, 2009.   

*Restricted Stock Awards*

Restricted stock 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. Upon vesting, each award is exchanged for one share of the Company’s common stock. As of June 30, 2009, the        Compensation Committee has approved the grant of an aggregate of 3,592,500restricted stock awards to eligible participants. There were 825,000 restricted stockawards granted in 2009, including 600,000 restricted stock awards for which 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 grant date fair value is determined based on the closing price of the Company’s common stock on the date of grant.

For the three month and six month periods ended June 30, 2009, the Company recognized compensation expense of $1.2 million and $3.4 million, respectively, related to the restricted stock awards, which are included in “General and Administrative Expenses” in the Consolidated Condensed Statements of Income. As of June 30, 2009,        there was $24.6 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 3.6 years. A summary of restricted stock awards activityunder the Planfor the sixmonths ended June30, 2009 is as follows: 

| ****                                                       |                                   |   | **Weighted**** ****Average** |   | **Aggregate**** **                                                                                                    |
|------------------------------------------------------------|----------------------------------------|--------|-----------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                                       | **Number**                             |   | **Grant**** ****Date**       |   | **Intrinsic**                                                                                                              |
|                                                       | **of**** ****Shares**             |   | **Fair**** ****Value**       |   | **Value**                                                                                                                  |
| Unvested - January 1, 2009             |  1,797,501                   |   | $26.26                       |   |  $   42,025,573                                                                                   |
|      Vested                       |    (250,000)            |   | $34.00                       |   |  $     8,500,000                                                                        |
|      Granted                      |     225,000   |   | $20.85                            |   |  $     3,906,000                                                                        |
|      Forfeited                    |      (80,000) |   | $28.87                       |   |  $                  -  |
| Subtotal                                                   |  1,692,501                   |   | $24.27                            |   |  $   29,381,817                                                                                   |
|      Approved for grant |     600,000   |   | (a)                               |   |  $   10,416,000                                                                                   |
| Unvested - June 30, 2009               |  2,292,501                   |   | n.a.                              |   |  $   39,797,817                                                                                   |

|  | (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. |
|--|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

16

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(****7****)****        ****Stock-Based Compensation****(continued)**

***(a) 2004 Stock Option and Incentive******Plan*****(continued)**

The outstanding unvested awards at June 30, 2009 are scheduled to vest as follows:

|                          |   | **Number**                                  |
|-------------------------------|--------|---------------------------------------------|
| **Vesting**** ****Date** |   | **of**** ****Awards**                  |
|                          |   |                                        |
| 2009                          |   |       40,000  |
| 2010                          |   |     620,001        |
| 2011                          |   |     175,000        |
| 2012                          |   |     150,000        |
| 2013                          |   |  1,157,500                        |
| 2014                          |   |     150,000        |
| Total                         |   |  2,292,501                        |

Approximately 476,667 of the unvested awards will vest based on the satisfaction of service requirements and 1,815,834 will vest based on the satisfaction of both service requirements and the achievement of pre-tax income performance targets.

*Stock Options*

There were 750,000 stock options granted in 2009, including 600,000 options for which 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 exercise price of the options areequal to the closing price of the Company’s common stock on the date the awards were made by the Compensation Committee. The options vest in equal annual installments from 2010 through 2013 upon the achievement of pre-tax income performance targets as established by the Compensation Committee. The options expire on May 28, 2019.

For the three and six month periods ended June 30, 2009, the Company recognized compensation expense of $0.4 million and $0.9 million, respectively, related to stock options grants, which are included in “General and Administrative Expenses” in the Consolidated Condensed Statements of Income. As of June        30, 2009, there was $9.3million 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 3.9 years.

 

17

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

**(7)        Stock-Based Compensation****(continued)**

***(a) 2004 Stock Option and Incentive******Plan*****(continued)**

        A summary of stock option activity under the Plan for the six months ended June 30, 2009 is as follows:

|                                                       |                                   |   | **Weighted**** ****Average** |   | **Weighted**** ****Average** |
|------------------------------------------------------------|----------------------------------------|--------|-----------------------------------|--------|-----------------------------------|
|                                                       | **Number**                             |   | **Grant**** ****Date**       |   | **Exercise**                      |
|                                                       | **of**** ****Shares**             |   | **Fair**** ****Value**       |   | **Price**                         |
| Outstanding - January 1, 2009          |     805,000   |   | $11.78                       |   | $20.68                       |
|      Granted                      |     150,000   |   | $  9.98            |   | $20.33                       |
|      Forfeited                    |      (20,000) |   | $14.84                       |   | $26.19                       |
| Subtotal                                                   |     935,000   |   | $11.42                       |   | $20.51                       |
|      Approved for grant |     600,000   |   | (a)                               |   | $20.33                       |
| Outstanding - June 30, 2009            |  1,535,000                   |   | n.a.                              |   | $20.44                       |

|  | (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 options had an intrinsic value of $1,566,500 and a weighted average remaining contractual life of 9.4 years at June 30, 2009. None of the options were exercisable at June 30, 2009.

The fair value of the initial tranche of the 2009 awards was determined using the Black-Scholes-Merton option pricing model using the following key assumptions:

| Risk-free interest rate                       | 2.65%          |
|---------------------------------------------------------|----------------|
| Expected life of options                      | 5.5 years |
| Expected volatility of underlying stock  | 51.11%         |
| Expected quarterly dividends (per share) | $0.00          |

******

***(b) Special Equity Incentive Plan***

The Company is authorized to grant up to 3,000,000 non-qualified stock options to key executives, employees and directors of the Company under the Special Equity Incentive Plan (the “Incentive Plan”). Options are granted at not less than the fair market value on the date of grant, as defined, and generally expire        10 years from the date of grant. No options were granted under the Incentive Plan during the six month period ended June 30, 2009. As of June 30, 2009, 36,500 options were outstanding and exercisable at a weighted-average exercise price of $3.97. The outstanding options had an intrinsic value of $488,640 and a weighted average remaining 

 

18

 

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

**(continued)**

**(****7****)****       ****Stock-Based Compensation****(continued)**

***(b) Special Equity Incentive Plan*****(continued)**

contractual life of 1.1 years at June 30, 2009. No options were exercised during the six month period ended June 30, 2009. A total of 195,634 shares of common stock are available for future grant under the Incentive Plan at June 30, 2009.

**(8)       ****Amended Credit Agreement**

On September 8, 2008, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), as Borrower, with Bank of America, as Agent. The Credit Agreement allows the Company to borrow up to $155 million on a revolving credit basis, with a $50 million sublimit for letters        of credit, and an additional $111.7 million under a supplementary facility (the “Supplementary Facility”) to the extent that the $155 million base facility has been fully drawn. Subject to certain conditions, the Company has the option to increase the base facility by up to an additional $45 million. Any outstanding loans under the revolving credit facility mature on February 22, 2012. In addition, the Credit Agreement provides that the Supplementary Facility shall be        reduced upon the sale of all or any portion of the $111.7 million face value of auction rate securities held in the Company’s investment portfolio as of September 8, 2008. Subsequent to September 8, 2008, the Company has sold auction rate securities with a face value in the amount of $4.7 million.

On February 23, 2009, the Credit Agreement was amended, effective December 31, 2008, to modify certain financial covenants to accommodate the impact of a $224.5 million impairment charge recorded in 2008 and to extend the maturity date of the Supplementary Facility to December 31, 2010.                  The Company has outstanding borrowings of $125.0 million and zero under its available revolving credit facilities as of June 30, 2009 and December 31, 2008, respectively, and has utilized the revolving credit facility for letters of credit. Accordingly, at June 30, 2009, the Company had $119.1 million available to borrow under the Credit Agreement, including the Supplementary Facility. In July 2009, the Company repaid the $125.0 million of outstanding borrowings under its revolving        credit facility.

In addition, the Company obtained two notes during 2009 totaling $9.7 million from First Hawaiian Bank, to finance building and land acquisition for operations in Guam. The current terms of both notes are a maturity date of February 12, 2016 and a LIBOR-based adjusted interest rate.                   In July 2009, the Company obtained a note for $35 million from U.S. Bancorp Equipment Finance, Inc., which is collateralized by transportation equipment owned by the Company. The current terms of the note include equal monthly installments at an interest rate of 6.44% payable over a five-year period beginning in July 2009, with a balloon payment of $29.3 million in 2014.          

**(9)        ****Earnings per Common Share**

Basic earnings per common share was computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share was similarly computed after giving consideration to the dilutive effect of stock options and restricted stock units outstanding on the weighted average number of common shares outstanding. 

The computation of diluted earnings per common share as of June 30, 2009 excludes 785,000 stock options and 682,500 restricted stock units because the awards would have an antidilutive effect. There were no antidilutive stock options or restricted stock units at June 30, 2008.

 

19

 

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

**(continued)**

 

**(10)     ****Dividends**

There were no cash dividends declared or paid on the Company’s outstanding common stock during the periods presented in the consolidated condensed financial statements included herein.

**(11)       ****Business Segments**

The following tables set forth certain business segment information relating to the Company’s operations for the six month and three month periods ended June 30, 2009 and 2008 (in thousands):

| **Six**** ****months**** ****ended**** ****June**** ****30,**** ****2009**   |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |
|-------------------------------------------------------------------------------------------------------|---------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|---------------|
|                                                                                                  | **Reportable**** ****Segments**                    |   |                                                             |   |                                                                                 |
|                                                                                                  |                                                    |   |                                                             |   | **Management**                                                                       |   |                                                    |   |                                                                                               |          | **Consolidated** |
|                                                                                                  | **Building**                                            |   | **Civil**                                                        |   | **Services**                                                                         |   | **Total**                                               |   | **Corporate**                                                                                      |          | **Total** |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| Revenues                                                                                              |  $ 2,558,919                             |   |  $ 186,574                                        |   |  $       155,537                        |   |  $ 2,901,030                             |   |  $              -  |          |  $     2,901,030  |
| Income from Construction Operations                                                    |  $      81,418  |   |  $   34,399                             |   |  $         29,841             |   |  $    145,658             |   |  $  (19,264)                                                                        |  *  |  $        126,394  |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| **Six**** ****months**** ****ended**** ****June**** ****30,**** ****2008**   |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
|                                                                                                  | **Reportable**** ****Segments**                    |   |                                                             |   |                                                                                 |
|                                                                                                  |                                                    |   |                                                             |   | **Management**                                                                       |   |                                                    |   |                                                                                               |          | **Consolidated** |
|                                                                                                  | **Building**                                            |   | **Civil**                                                        |   | **Services**                                                                         |   | **Total**                                               |   | **Corporate**                                                                                      |          | **Total** |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| Revenues                                                                                              |  $ 2,462,710                             |   |  $ 118,704                                        |   |  $         63,309             |   |  $ 2,644,723                             |   |  $              -  |          |  $     2,644,723  |
| Income from Construction Operations                                                    |  $      76,960  |   |  $     3,572                  |   |  $         11,635             |   |  $      92,167  |   |  $  (10,604)                                                                        |  *  |  $          81,563  |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| **Three**** ****months**** ****ended**** ****June**** ****30,**** ****2009** |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |
|                                                                                                  | **Reportable**** ****Segments**                    |   |                                                             |   |                                                                                 |
|                                                                                                  |                                                    |   |                                                             |   | **Management**                                                                       |   |                                                    |   |                                                                                               |          | **Consolidated** |
|                                                                                                  | **Building**                                            |   | **Civil**                                                        |   | **Services**                                                                         |   | **Tota****l**                                           |   | **Corporate**                                                                                      |          | **Total** |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| Revenues                                                                                              |  $ 1,215,982                             |   |  $   97,229                             |   |  $         69,537             |   |  $ 1,382,748                             |   |  $              -  |          |  $     1,382,748  |
| Income from Construction Operations                                                    |  $      38,153  |   |  $   21,688                             |   |  $         14,196             |   |  $      74,037  |   |  $  (10,277)                                                                        |  *  |  $          63,760  |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| **Three**** ****months ****ended**** ****June**** 30, ****2008**             |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |
|                                                                                                  | **Reportable**** ****Segments**                    |   |                                                             |   |                                                                                 |
|                                                                                                  |                                                    |   |                                                             |   | **Management**                                                                       |   |                                                    |   |                                                                                               |          | **Consolidated** |
|                                                                                                  | **Building**                                            |   | **Civil**                                                        |   | **Services**                                                                         |   | **Total**                                               |   | **Corporate**                                                                                      |          | **Total** |
|                                                                                                  |                                                    |   |                                                             |   |                                                                                 |   |                                                    |   |                                                                                               |          |   |
| Revenues                                                                                              |  $ 1,299,690                             |   |  $   58,548                             |   |  $         30,149             |   |  $ 1,388,387                             |   |  $              -  |          |  $     1,388,387  |
| Income from Construction Operations                                                    |  $      42,170  |   |  $        737  |   |  $           5,334  |   |  $      48,241  |   |  $    (5,641)                                                             |  *  |  $          42,600  |

          

* Consists primarily of corporate general and administrative expenses.

 

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****TUTOR PERINI CORPORATION AND SUBSIDIARIES****

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**

(continued)

 

**(****12****)****      ****Employee Pension        Plans**

The Company has a defined benefit pension plan that covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The Company also has an unfunded supplemental retirement plan for certain employees whose benefits under the defined benefit plan are reduced because of compensation limitations        under federal tax laws. Effective June 1, 2004, all benefit accruals under the Company’s pension plan were frozen; however, the current vested benefit was preserved. In accordance with SFAS No. 132(R), “Employers’ Disclosures About Pensions and Other Post-Retirement Benefits”, the pension disclosure presented belowincludes aggregatedamounts for        both of the Company’s plans. The following table sets forth the net pension cost by component for the threemonth and six month periods endedJune 30, 2009 and 2008:         

>  
**Three**** ****Months**
 
**Six**** ****Months**
 
**Ended**** June ****30,**
 
**Ended**** ****Jun****e ****30,**
 
**2009**
 
**2008**
 
**2009**
 
**2008**
 
(in thousands)

Interest cost on projected benefit obligation

 $ 1,162 
 
 $    1,158 
 
 $ 2,324 
 
 $    2,316 

Expected return on plan assets

   (1,219)
 
     (1,201)
 
   (2,438)
 
      (2,401)

Recognized actuarial loss

        473 
 
          398 
 
        946 
 
           796 
        
Net Pension Cost

 $    416 
 
 $       355 
 
 $    832 
 
 $       711 

The Company contributed $1.1 million and $0.6 million to its defined benefit pension plan in April 2009 and July 2009, respectively. TheCompany expects to contribute an additional $5.3 million to its defined benefit pension plan during the remainder of 2009.          

**(13)      ****Related Party Transactions**

On May 28, 2009, the board of directors of the Company approved a one-time cash payment of $3 million to Ronald N. Tutor, the Company’s chairman and chief executive officer, for his agreement to personally guarantee certain surety bond obligations related to a significant construction project awarded to the Company in July 2008. The Company made the        payment in June 2009. Mr. Tutor was required by the surety companies to enter into this guaranty for the benefit of the Company in connection with the award of the project. Mr. Tutor has agreed to remain as guarantor until the project is completed. In determining the appropriate fee to pay Mr. Tutor for this guaranty, the board of directors considered information about market rates for third-party guaranty fees. 

 

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**Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations**

**Overview**

Tutor Perini Corporation, formerly known as Perini Corporation, is a leading construction services company, based on revenues, as ranked by *Engineering News-Record*, offering        diversified general contracting and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets for executing large, complex projects on time and within budget while adhering to strict quality control measures. We offer general contracting, pre-construction planning and comprehensive project management services, including the planning and scheduling of the        manpower, equipment, materials and subcontractors required for a project. We also offer self-performed construction services including excavation, concrete forming and placement, steel erection, electricaland mechanicalservices,plumbing and HVAC.                  Our business is conducted through three reportable segments: building, civil, and management services. Our building segment focuses on large, complex projects in the hospitality and gaming, municipal offices, sports and entertainment, educational, transportation, corrections, healthcare, biotech, pharmaceutical and high-tech markets, and electrical, mechanical, plumbing and HVAC services as a subcontractor to the Company and other general contractors. Our civil segment specializes in        public works construction, primarily in the western, northeastern and mid-Atlantic United States, including the repair, replacement and reconstruction of the public infrastructure such as highways, bridges, mass transit systems and wastewater treatment facilities. Our management services segment, including the recently acquired Tutor-Saliba operation in Guam, provides diversified construction, design-build and maintenance services to the U.S. military and government agencies, as well as        to surety companies and multi-national corporations in the United States and overseas.

**Significant Accounting Policies**

Our significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Our critical accounting policies are also identified and discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31,        2008. We have made no significant changes to these policies during the six months of 2009, except as noted below.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141(R), “Business Combinations,” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer of a business recognizes and        measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS No. 141(R) also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for us beginning January 1, 2009 and        we applied the provisions of SFAS No. 141(R) to an acquisition completed on January 15, 2009 (see Note 3(a)).                   In February 2008, the FASB issued FASB Staff Position(“FSP”)No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which amends SFAS No. 157 by delaying its effective date by one year for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a        recurring basis. Therefore, the application of SFAS No. 157 relating to our non-financial assets and non-financial liabilitieswas adopted on January 1, 2009. The adoption of SFAS No. 157 did not have a material impact on our financial statements.

In December 2008, the FASB FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP 132(R)-1”), which requires employers to disclose information about fair value measurements of plan assets that are similar to the disclosures about fair value 

 

22

 

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measurements required by SFAS No. 157, “Fair Value Measurements.” FSP 132(R)-1 will become effectivefor ourannual financial statementsfor 2009. Since        FSP 132(R)-1 only requires enhanced disclosures, the adoption of FSP 132(R)-1 will not have an impact on ourfinancial statements.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value when the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions that are not Orderly”(“FSP 157-4”), which is effective for        usfor the quarterly period beginning April 1, 2009. FSP 157-4 affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. FSP 157-4 provides guidance for estimating fair value when the volume and level of market        activity for an asset or liability have significantly decreased and determining whether a transaction was orderly. FSP 157-4 applies to all fair value measurements when appropriate. We adopted the provisions of FSP 157-4 beginning April 1, 2009. The adoption of FSP 157-4 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP 115-2”), which is effective for usfor the quarterly period beginning April 1, 2009. FSP 115-2 amends existing guidance for        determining whether another-than-temporary impairment of debt securities has occurred. Among other changes, the FASB replaced the existing requirement that an entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert (a) it does not have the intent to sell the security, and (b) it is more likely than not it will not have to sell the        security before recovery of its cost basis.We adopted the provisions of FSP 115-2 beginning April 1, 2009.The adoption of FSP 115-2 did not have a material impact on ourfinancial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”(“FSP 107-1”), which is effective for usfor the quarterly period beginning        April 1, 2009. FSP 107-1 requires an entity to provide the annual disclosures required by SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,”in its interim financial statements. We adopted the provisions of FSP 107-1 beginning April 1, 2009. Other than the required disclosures, the adoption of FSP 107-1 did not have amaterial impact on        ourfinancial statements. 

**Recent Developments**

*Company Name Change*

On May 28, 2009, ourshareholders voted to approve changingourCompany name from Perini Corporation to Tutor Perini Corporation. We believe that the name change is        in the best interests of the Company and our shareholders because the new name reflects the larger, more diversified merged company and allows us to maximize the benefit of the reputations and goodwill of both Tutor-Saliba and Perini. In conjunction with the name change, our common stock now trades on the New York Stock Exchange under its new stock symbol “TPC”.

*Acquisition of Keating Building Corporation*

OnJanuary 15, 2009, we completed our acquisition of Daniel J. Keating Construction Company, d/b/a Keating Building Corporation (“Keating”), a Philadelphia-based privately held construction, construction management and design-build company. Under the terms of the        transaction, we acquired 100% of Keating’s common stock for total consideration of $51.1 million, which includes amounts paid at or subsequent to closing and additional consideration that may become payable under the terms of the agreement. Keating is licensed to provide construction services in a number of states, mostly in the mid-Atlantic and northeast regions of the United States. We believe that the acquisition of Keating is a strong strategic fit which will enable us to        expand our building construction market presence in the eastern half of the United States, including the important northeast and mid-Atlantic regions, and to realize significant synergies from the acquisition by deploying Keating’s resources in the regional private non-residential and 

 

23

 

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public works building markets in the eastern United States. The results of operations for Keating are included in our financial statements for the first six monthsof 2009.

*Amended Credit Agreement*

Effective September 8, 2008, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, as Agent, which allows us to borrow up to $155 million on a revolving credit basis (the “Revolving Facility”), with a $50 million sublimit for letters of credit, and an additional        $111.7 million under a supplementary facility (the “Supplementary Facility”) to the extent that the $155 million base facility has been fully drawn. The total amount available to borrow under the Supplementary Facility reduces upon the sale of all or any portion of the $111.7 million face value of auction rate securities held in our investment portfolio as of September 8, 2008. Subsequent to September 8, 2008, we have sold auction rate securities with a face value in the        amount of $4.7million. This Supplementary Facility provides us with access to a source of liquidity should the need arise. On February 23, 2009, the Credit Agreement was amended, effective from December 31, 2008, to modify certain financial covenants to accommodate the impact of a $224.5 million impairment charge recorded in 2008 and to extend the maturity date of the Supplementary Facility to December 31, 2010. The termination        date of the Revolving Facility is February 22, 2012. 

*Backlog of**$5.1**B**illion*

Our backlog of uncompleted construction work at June 30, 2009was approximately $5.1billion, as compared to the $6.7billion backlog reported at December 31, 2008.        The June 30, 2009backlog includes approximately $475 millionadded in the first quarter of 2009, presented as “New Business Awarded” in the table below, due to the acquisition of Keating. In addition, new awards added during the second quarter of 2009 include a new $272 million courthouse in Southern California and a $204 million runway reconstruction at JFK        Airport in New York. The overall decrease in our backlog during 2009 reflects the normal completion of work under contract for the period and a reduced level of new work acquired during thefirst six months of 2009as a result of the challenging economic environment, which has caused some customers to delay and/or reduce in scope certain construction projects.

|                     | **Backlog**** ****at**                                                         |   | **New**** ****Business**                                                                   |   | **Revenue**                                                   |   | **Backlog**** ****at**                                             |
|--------------------------|-------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|-------------------------------------------------------------------------|
|                     | **Dec****. ****31,**** ****2008**                                         |   | **Awarded**                                                                                     |   | **Recognized**                                                |   | **June ****3****0****,**** ****2009**                         |
|                     | (in millions)                                                                  |
| Building                 | $        5,732.0                            |   | $        1,096.5                                        |   | $    (2,558.9)                            |   | $      4,269.6                            |
| Civil                    |              528.0 |   |              229.6             |   |          (186.6) |   |            571.0 |
| Management Services |              415.9 |   |                (0.5) |   |          (155.5) |   |            259.9 |
| Total                    | $        6,675.9                            |   | $        1,325.6                                        |   | $    (2,901.0)                            |   | $      5,100.5                            |

**Results of Operations**

**Comparison of the****Second****Quarter of 2009 with the****Second****Quarter of        2008**

Revenues decreased by $5.7 millionto $1,382.7million, while gross profit increased by $37.2million, income from construction operations increased by $21.2million, and net income increased by $10.3million (or 36.0%) to $38.9million. These profit increases primarily reflect improved profit contributions from our civil and management services segments, including the positive impact in 2009 of the addition of Tutor-Saliba on both of these segments.Basic earnings per common share were $0.80for the secondquarter of 2009, compared to $1.05for the secondquarter of 2008. Diluted earnings per common share were $0.79for the secondquarter of 2009, compared to $1.03for the secondquarter of 2008.The reductions in earnings per share reflect the increase in the number of common shares outstanding as a result of the        merger with Tutor-Saliba.

 

24

 

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|                     | **Revenues**** ****for**** ****the**                                      |   |                                                                                     |   |                                                  |
|--------------------------|-------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|
|                     | **Three**** ****Months**** ****Ended**** June ****3****0****,** |   | **Increase**                                                                             |   | **%**                                                 |
|                     | **2009**                                                                            |   | **2008**                                                                                 |   | **(Decrease)**                                        |   | **Change** |
|                     | (in millions)                                                                  |   |                                                                                     |
| Building                 | $     1,216.0                                              |   | $        1,299.7                                 |   | $      (83.7)           |   |    (6.4)% |
| Civil                    |            97.2              |   |               58.5 |   |          38.7 |   |   66.2% |
| Management Services |            69.5              |   |               30.2 |   |          39.3 |   | 130.1% |
| Total                    | $     1,382.7                                              |   | $       1,388.4                                       |   | $        (5.7)     |   |   (0.4)% |

Overall revenues decreasedby $5.7 million (or 0.4%), from $1,388.4million in 2008to $1,382.7million in        2009. On a pro forma basis, including Tutor-Saliba, revenues were $1,802.4 million for the three months ended June 30, 2008. The decrease in revenues was due primarily to a decline in building construction revenues that was largely offset by increases in revenues from both civil and management services operations. The decrease in building construction revenues of $83.7million (or 6.4%), from $1,299.7million in 2008to $1,216.0million in 2009, was due primarily to a lower volume of work on projects in the hospitality and gaming market, where projects have been completed (or are nearing completion) and the volume of new projects available in late 2008 and 2009 has been significantly reduced due to the challenging        economic environment during this period. Partly offsetting this decrease in building construction revenues was an increase in revenues as a result of the merger with Tutor-Saliba and the acquisition of Keating. Civil construction revenues increased by $38.7million (or 66.2%), from $58.5million in 2008to        $97.2million in 2009, due primarily to an increase in revenues as a result of the merger with Tutor-Saliba. Management services revenues increased by $39.3million (or 130.1%), from $30.2million in 2008to $69.5million in 2009, due to an increased volume of work in Iraq and Guam as well as the addition of Tutor-Saliba.         

|                       | **Income**** ****from**** ****Construction**                              |   |                                                                                    |   |                                                      |
|----------------------------|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|                       | **Operations**** ****for**** ****the**** **                          |   | **Increase**                                                                            |   |                                                      |
|                       | **Three**** ****Months**** ****Ended**** June ****3****0****,** |   | **(Decrease)**                                                                          |   | **%**                                                     |
|                       | **2009**                                                                            |   | **2008**                                                                                |   | **In**** ****Income**                                |   | **Change** |
|                       | (in millions)                                                                  |   |                                                                                    |
| Building                   | $         38.2                         |   | $          42.2                       |   | $      (4.0)                |   |      (9.5)% |
| Civil                      |            21.7              |   |               0.7 |   |        21.0            |   | 3,000.0% |
| Management Services   |            14.2              |   |               5.3 |   |          8.9 |   |    167.9% |
| Subtotal                   | $         74.1                         |   | $          48.2                       |   | $     25.9                       |   |      53.7% |
|                       |                                                                                |   |                                                                                    |   |                                                      |   |   |
| Less:  Corporate |           (10.3)                  |   |              (5.6)     |   |         (4.7)     |   |      83.9% |
| Total                      | $         63.8                         |   | $          42.6                       |   | $     21.2                       |   |      49.8% |

Income from construction operations increased by $21.2 million (or 49.8%), from $42.6 million in 2008 to $63.8 million in 2009. On a pro forma basis, including Tutor-Saliba, income from construction operations was $66.4 million for the three months ended June 30, 2008. Income from construction operations (excluding corporate) increased by        $25.9million (or 53.7%), from $48.2million in 2008to $74.1million in 2009. Building construction income from operations decreased by $4.0million (or 9.5%), from $42.2million in 2008to $38.2million in 2009, due primarily to the decrease in revenues discussed above. Civil construction income from operations increasedby $21.0million(or 3,000.0%), from $0.7million in 2008to $21.7million in 2009, due primarily to favorable performanceon a wastewater treatment project in metropolitan New York and bridge and waste remediation        projects in California as these projects reached substantial completion.Management services income from operations increasedby $8.9million (or 167.9%), from $5.3million in 2008to $14.2million in 2009, due primarily to the increased revenues discussed above and continued favorable performance on overhead coverage system projects in Iraq.

 

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Overall income from construction operations was unfavorably impacted by a $4.7 million increase in corporate general and administrative expenses, from $5.6 million in 2008 to $10.3 million in 2009, due primarily to expenses related to the acquisition and on-going integration of Tutor-Saliba. 

Other income decreasedby $1.9million, from $2.5million in 2008to $0.6million in 2009, due primarily to a $2.1million decrease in interest income due to lower available interest rates and a lower available cash investment balance in 2009.         Interest expense increased by $2.5million, from $0.4 million in 2008 to $2.9million in 2009, due primarily to an increase in borrowing under our revolving credit facility and the increase in debt assumed in conjunction with the merger with Tutor-Saliba.         The provision for income taxes increased by $6.4million, from $16.2 million in 2008 to $22.6million in 2009, due primarily to the increase in pretax income in 2009.The effective tax rate for the second quarter of 2009was 36.7%, as compared to 36.2% for the second quarter of 2008. 

**Comparison of the Six Months Ended June 30, 200****9****with the Six Months Ended June 30, 200****8**

Revenues increased by $256.3million to $2,901.0million, gross profit increased by $77.6million, income from construction operations increased by $44.8million, and net income increased by $24.2million (or 45.1%) to $77.9million in 2009. While a part of these increasesis attributable to the additions of Tutor-Saliba and Keating, the performance in the firstsix monthsof 2009reflectsimproved profit contributions in all of our segments – building, civiland management services.Basic earnings        per common share were $1.61for the first six months of 2009, compared to $1.98 for the first six months of 2008. Diluted earnings per common share were $1.59for the first six months of 2009, compared to $1.94 for the first six months of 2008.The reductions in earnings per share reflect the increase in the        number of common shares outstanding as a result of the merger with Tutor-Saliba.

|                     | **Revenues**** ****for**** ****the**                                |   |                                                                         |   |                                                 |
|--------------------------|-------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|------------------------------------------------------|
|                     | **Six ****Months**** ****Ended**** June ****3****0****,** |   | **Increase**                                                                 |   | **%**                                                |
|                     | **2009**                                                                      |   | **2008**                                                                     |   | **(Decrease)**                                       |   | **Change** |
|                     | (in millions)                                                            |   |                                                                         |
| Building                 | $     2,558.9                                        |   | $      2,462.7                                 |   | $      96.2            |   |     3.9% |
| Civil                    |           186.6             |   |            118.7      |   |         67.9 |   |   57.2% |
| Management Services |           155.5             |   |             63.3 |   |         92.2 |   | 145.7% |
| Total                    | $     2,901.0                                        |   | $     2,644.7                                       |   | $    256.3                       |   |    9.7% |

Overall revenues increased by $256.3million (or 9.7%), from $2,644.7million in 2008to $2,901.0 million in 2009, as all of our segments experienced increasedrevenuesdue primarily to the merger with Tutor-Saliba. On a pro forma basis, including Tutor-Saliba, revenues were $3,442.6 million for the six months ended June 30, 2008. The acquisition of Keating also resulted in an increase in building construction revenues compared to 2008. Building construction revenues increased by $96.2 million (or 3.9%), from $2,462.7 million in 2008        to $2,558.9 million in 2009, as an increase in building construction revenues as a result of the merger with Tutor-Saliba and the acquisition of Keating was partly offset by decreased revenues in the hospitality and gaming market, where projects have been completed (or are nearing completion) and the volume of new projects available in late 2008 and 2009 has been significantly reduced due to the challenging economic environment during this period. Civil construction revenues increased        by $67.9million (or 57.2%), from $118.7million in 2008to $186.6million in 2009 due to the addition of Tutor-Saliba.Management services revenues increased by $92.2million (or 145.7%), from $63.3million in 2008to $155.5million in 2009, due primarily to an increased volume of work in Iraq and Guam as well as the addition of Tutor-Saliba.

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|                       | **Income**** ****from**** ****Construction**                        |   |                                                                                    |   |                                            |
|----------------------------|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                       | **Operations**** ****for**** ****the**** **                    |   | **Increase**                                                                            |   |                                            |
|                       | **Six ****Months**** ****Ended**** June ****3****0****,** |   | **(Decrease)**                                                                          |   | **%**                                           |
|                       | **2009**                                                                      |   | **2008**                                                                                |   | **In**** ****Income**                      |   | **Change** |
|                       | (in millions)                                                            |   |                                                                                    |
| Building                   | $        81.4                         |   | $          77.0                       |   | $      4.4        |   |     5.7% |
| Civil                      |           34.4              |   |               3.6 |   |       30.8        |   | 855.6% |
| Management Services   |           29.9              |   |             11.6            |   |       18.3        |   | 157.8% |
| Subtotal                   | $      145.7                                    |   | $          92.2                       |   | $    53.5                   |   |   58.0% |
|                       |                                                                          |   |                                                                                    |   |                                            |   |   |
| Less:  Corporate |         (19.3)                        |   |            (10.6)                |   |        (8.7) |   |   82.1% |
| Total                      | $      126.4                                    |   | $          81.6                       |   | $    44.8                   |   |   54.9% |

Income from construction operations increased by $44.8 million (or 54.9%), from $81.6 million in 2008 to $126.4 million in 2009. On a pro forma basis, including Tutor-Saliba, income from construction operations was $127.1 million for the six months ended June 30, 2008. Income from construction operations (excluding corporate) increased by        $53.5million (or 58.0%), from $92.2million in 2008to $145.7million in 2009. Building construction income from operations increased by $4.4million (or 5.7%), from $77.0million in 2008to $81.4million in 2009, due primarily to the significant increase in revenues discussed above. Also, building construction operations experienced an improvement in gross margin percentage in 2009 due primarily to profit increases recognized based on substantial completion of certain projects in Las        Vegas. Civil construction income from operations increasedby $30.8million(or 855.6%), from $3.6million in 2008to $34.4million in        2009, due primarily to favorable performance on a wastewater treatment project in metropolitan New York and bridge and waste remediation projects in California as these projects reached substantial completion.Management services income from operations increasedby $18.3million (or 157.8%), from $11.6million in 2008to $29.9million in 2009, due primarilyto the increased revenues discussed above and continued favorable performance on overhead coverage system projects in Iraq.Overall income from        construction operations was unfavorably impacted by an $8.7 million increase in corporate general and administrative expenses, from $10.6 million in 2008 to $19.3 million in 2009, due primarily to expenses related to the acquisition and integration of Tutor-Saliba. In addition, corporate general and administrative expenses in 2009 include $0.7 million of acquisition-related expenses.

        Other income decreased by $2.1million, from $4.0million in 2008to $1.9million in 2009. Recognition of a $2.7 million loss in 2008 due to the adjustment of certain of our investments in auction rate securities to fair value was more than offset by a        $4.6million decrease in interest income due to lower available interest rates and a lower available cash investment balance in 2009.

        Interest expense increased by $3.3million, from $0.8million in 2008to $4.1million in 2009, due primarily to an increase in borrowing under our revolving credit facility and the increase in debt assumed in conjunction with the merger with        Tutor-Saliba.

        The provision for income taxes increased by $15.2million, from $31.1million in 2008to $46.3million in 2009, due primarily to the increase in pretax income in 2009. The effective tax rate for the first six months of 2009was 37.3%, as compared to 36.7% for the first six months of 2008. 

**Potential Impact of Current Economic Conditions**

Current economic and financial market conditions in the United States and overseas, including severe disruptions in the credit markets, could adversely affect our results of operations in future periods, particularly if there is a prolonged economic recession or depression or if government efforts to stabilize and revitalize credit markets        and financial institutions are not effective. The current instability in the financial markets has made it difficult for certain of our customers, including state and local governments, 

 

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to access the credit markets to obtain financing or refinancing, as the case may be, to fund new construction projects on satisfactory terms or at all. State and local governments also are facing potentially significant budget shortfalls as a result of declining tax and other revenues, which may cause them to defer or cancel planned        infrastructure projects. This situation has contributed to a $1,575million decrease in our backlog during 2009 as new projects have been deferred or delayed pending a turnaround in the economy, an improvement in the credit markets, and the release of funds for construction under the Federal economic stimulus package. We may encounter increased levels of deferrals and delays related to new construction projects in the future.        Difficulty in obtaining adequate financing due to the unprecedented disruption in the credit markets may increase the rate at which our customers defer, delay or cancel proposed new construction projects. Such deferrals, delays or cancellations could have an adverse impact on our future operating results.         

**Liquidity and Capital Resources**

***Cash and Working Capital***

Effective September 8, 2008, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, as Agent. The Credit Agreement allows us to borrow up to $155 million on a revolving credit basis (the “Revolving Facility”), with a $50 million sublimit for letters of credit, and        an additional $111.7 million under a supplementary facility (the “Supplementary Facility”) to the extent that the $155 million base facility has been fully drawn. The total amount available to borrow under the Supplementary Facility reduces upon the sale of all or any portion of the $111.7 million face value of auction rate securities held in our investment portfolio as of September 8, 2008.Subsequent to September        8, 2008, we have sold auction rate securities with a face value in the amount of $4.7million. This Supplementary Facility provides us with access to a source of liquidity should the need arise. On February 23, 2009, the Credit Agreement was amended, effective December 31, 2008, to modify certain financial covenants to accommodate the impact of a $224.5 million impairment charge recorded in 2008 and to extend the maturity date        of the Supplementary Facility to December 31, 2010. The termination date of the Revolving Facility is February 22, 2012. We hadborrowings of $125 millionunder the Revolving Facility as of June 30, 2009, which we repaid in full in July 2009. We did not borrow under the Revolving Facility during 2008. We had $119.1million available to borrow under the Credit Agreement, including the Supplementary Facility, at June 30, 2009, including outstanding letters of credit.

In July 2009, we obtained a note for $35 million from U.S. Bancorp Equipment Finance, Inc., which is collateralized by transportation equipmentthat we own. The current terms of the note include equal monthly installments at an interest rate of 6.44% payable over a five-year period        beginning in July 2009, with a balloon payment of $29.3 million in 2014. This loan provides us with additional liquidity in the near term.

Cash and cash equivalents as reported in the accompanying Consolidated Condensed Financial Statements consist of amounts held by us as well as our proportionate share of amounts held by construction joint ventures. Cash held by us is available for general corporate purposes while cash held by construction joint ventures is available only for        joint venture-related uses. Joint venture cash and cash equivalents are not restricted to specific uses within those entities; however, the terms of the joint venture agreements limit our ability to distribute those funds and use them for corporate purposes. Cash held by construction joint ventures is distributed from time to time to us and to the other joint venture participants in accordance with our respective percentage interest after the joint venture partners determine that a cash        distribution is prudent. Cash distributions received by us from our construction joint ventures are then available for general corporate purposes. At June30, 2009 and December 31, 2008, cash held by us and available for general corporate purposes was $435million and $342.3 million, respectively, and our proportionate share of cash held by joint ventures and available        only for joint venture-related uses was $15.9million and $43.9 million, respectively. 

 

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A summary of cash flows for each of the six month periods ended June30, 2009 and 2008 is set forth below:

|                                                | **Six ****Months**                        |
|-----------------------------------------------------|------------------------------------------------|
|                                                | **Ended**** June ****3****0****,**   |
|                                                | **2009**                                       |   | **2008** |
|                                                | (in millions)                             |
| Cash flows from:                          |                                           |   |   |
| Operating activities                           | $    (40.6)                |   | $     72.9 |
| Investing activities                           |       (21.9)     |   |     (121.4) |
| Financing activities                           |      127.2            |   |          6.0 |
| Net increase (decrease) in cash |        64.7 |   |       (42.5) |
| Cash at beginning of year       |      386.2            |   |      459.2 |
| Cash at end of period           | $   450.9                       |   | $   416.7 |

During 2009, we used $40.6million in cash to fund operating activities. The negativecash flow from operating activities is primarily due to timing in the collection of receivables on certain large projects. We also used        $21.9million in cash to fund investing activities, principally for the purchase of property to be used in our management services segment in Guam, and to fund the $44.8 million acquisition of Keating. These investing cash outflows were partly offset by a cash balance of $37.9million recorded in connection with the acquisition of Keating. We received $127.2million in cash from financing activities, primarily due to $125 million of borrowing under our Revolving Facility.As a result, our cash balance increased by $64.7million during the first six monthsof 2009. In July 2009, we repaid the $125 million of        outstanding borrowings under our revolving credit facility.

In November 2008, our Board of Directors authorized a program to repurchase up to $100 million of our common stock over the ensuing twelve months. During 2008, we repurchased 2,003,398 shares for an aggregate purchase price of $31.8 million under the program. During 2009, we have not made any repurchases of our common stock under the        program.

Working capital increased by $133.1 million, from $225million at the end of 2008to $358.1million at June30, 2009,due primarily to the borrowing under our Revolving Facility in 2009.Accordingly, the current ratio increased from 1.13x at December 31, 2008 to 1.22x at June30, 2009.          

***Long-term Investments***

We hold a variety of highly rated (mostly AAA or Aaa) interest bearing auction rate securities that generally represent interests in pools of either interest bearing student loans or municipal        bond issues. These auction rate securities were intended or designed to provide liquidity via an auction process that resets the applicable interest rate at predetermined intervals, typically every 7 or 28 days. In the event that such auctions are unsuccessful, the holder of the securities is not able to access these funds until a future auction of these investments is successful. An unsuccessful auction results in a lack        of liquidity in the securities but does not signify a default by the issuer. Upon an unsuccessful auction, the interest rates do not reset at a market rate but instead reset based upon a formula contained in the security, which rate is generally higher than the current market rate.Since mid-February 2008, regularly scheduled auctions for these securities started to fail throughout the market at a significant rate. At that time,        we had $181.9 million invested in auction rate securities. Since then, we have been successful in liquidating at par value $74.9 million ofour investment in auction rate securities. At June30, 2009, we had investments in auction rate securities of $101.2million, which are reflected at fair value. These        investments are considered to be “available-for-sale,” and are classified as long-term investments. Our investment policy is to manage our assets to achieve our goals of preserving principal, maintaining adequate liquidity at all times, and maximizing returns subject to our investment guidelines. The current overall liquidity concerns in capital markets have affected our ability to liquidate many of        our investments in auction rate securities. Based on our ability to access our cash equivalent investments, our anticipated operating cash flows, and our 

 

29

 

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available Revolving Facility and our Supplemental Facility discussed above, we do not expect that the short-term lack of liquidity of our auction rate security investments will materially affect our overall liquidity position or our ability to execute our current business plan.

***Debt***

Total debt, including current maturities, at June30, 2009 was $208.7million, an increase of $128.4million from December 31, 2008, due primarily to the $125 million        of borrowing under our Revolving Facility at June 30, 2009.Accordingly, long-term debt, net of current maturities, increased from $61.6 million at December 31, 2008 to $186.4million at June30, 2009. The long-term debt to equity ratio was .15x at June30, 2009 compared to .05x at December 31, 2008.          

***Dividends***

There were no cash dividends declared or paid on our outstanding common stock during the periods presented herein.          

***Forward-looking Statements***

The statements contained in this Management’s Discussion and Analysis of the Consolidated Condensed Financial Statements and other sections of this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including        without limitation, statements regarding our expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or        other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:

|  | ·      | The current global financial crisis and significant deterioration in global economic conditions, which may cause or accelerate a number of the other factors listed below; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | our ability to convert backlog into revenue; |
|--|----------------------------------------|----------------------------------------------|

|  | ·      | the potential delay, suspension, termination or reduction in scope of a construction project; |
|--|----------------------------------------|-----------------------------------------------------------------------------------------------|

|  | ·      | the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------|

|  | ·      | the availability of borrowed funds on terms acceptable to us; |
|--|----------------------------------------|---------------------------------------------------------------|

|  | ·      | the ability to retain certain members of management; |
|--|----------------------------------------|------------------------------------------------------|

|  | ·      | the ability to obtain surety bonds to secure our performance under certain construction contracts; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------|

|  | ·      | possible labor disputes or work stoppages within the construction industry; |
|--|----------------------------------------|-----------------------------------------------------------------------------|

|  | ·      | changes in federal and state appropriations for infrastructure projects; |
|--|----------------------------------------|--------------------------------------------------------------------------|

|  | ·      | possible changes or developments in worldwide or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances; |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | actions taken or not taken by third parties including our customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials; |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | the effects of disruption from the mergerwith Tutor-Saliba making it more difficult to maintain relationships with employees,                    customers, other business partners or government entities; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | the ability to realize the expected synergies resulting from the mergerwith Tutor-Saliba in the amounts or in the timeframe                    anticipated and the ability to integrate Tutor-Saliba’s businesses into those of Tutor Perini in a timely and cost-efficient manner; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|  | ·      | an unsolicited offer by another company to acquire the assets or capital stock of Tutor Perini; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------|

|  | ·      | the impact on the trading price of Tutor Perini common stock of resales in the public markets of shares of Tutor Perini common stock received by Tutor-Saliba shareholders in the merger; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | the ability of Mr. Tutor to exert significant influence over corporate decisions as a result of his ownership of Tutor Perini common stock following the merger, his position as chairman and chief executive officer of the combined company and his right to designate up to two nominees for election as                    directorsof Tutor Perini; and |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | other risks and uncertainties discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on February 27, 2009. |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

There has been no material change in our exposure to market risk from that described in our Annual Report on Form 10-K for the year ended December 31, 2008, Item 7A, since December 31, 2008.

**Item 4. Controls and Procedures**

**Disclosure Controls and Procedures**

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design        and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible        controls and procedures. The effectiveness of our disclosure controls and procedures is necessarily limited by the staff and other resources available to us and, although we have designed our disclosure controls and procedures to address the geographic diversity of our operations, this diversity inherently may limit the effectiveness of those controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the        period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial        Officer, as appropriate, to allow timely decisions regarding required disclosure.

**Changes in Internal Controls Over Financial Reporting**

Therewas no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our        internal control over financial reporting. As part of our integration of Tutor-Salibaand Keating, we are in the process of incorporating our controls and procedures into the operations of Tutor-Salibaand Keating.

In connection with Rule 13a-15(b) under the Securities Exchange Act of 1934, we will continue to review and assess the adequacy ofour disclosure controls and procedures, including our internal control        overfinancial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

 

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**Part II. - Other Information**

*Item 1. Legal Proceedings*

From time to time in the ordinary course of business, we are subject to claims, asserted or unasserted, or named as a party to lawsuits or investigations. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings cannot be predicted with any certainty and, in the case of more complex legal        proceedings, the results are difficult to predict at all. We disclosed information about certain of our legal proceedings in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2008, and in Part II, Item 1 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009. Set forth below is an update to those disclosures. For further discussion regarding legal proceedings, see Note 6 of Notes to Consolidated Condensed Financial        Statements.

***Weitman v. Tutor, et al Matter***

On June 19, 2008, an individual named Nina Weitman filed a lawsuit in Superior Court of Middlesex County, Massachusetts, (*Weitman v. Tutor, et al.,* (Massachusetts Superior Court, Middlesex County, No. 08-2351) allegedly on behalf of herself and other shareholders of Tutor Perini, against Ronald N. Tutor, Robert Band, Raymond R. Oneglia, Michael R.        Klein, William W. Brittain, Jr., Robert A. Kennedy, Peter Arkley and Robert L. Miller (collectively, the “Individual Defendants”); Tutor Perini itself; and Tutor-Saliba. Ms. Weitman reportedly owns seventeen (17) shares of Tutor Perini common stock. The complaint alleged generally that the Individual Defendants breached their fiduciary duties to Tutor Perini by agreeing to enter into the merger agreement with Tutor-Saliba. Specifically, the complaint alleged: that the proxy        statement related to, among other things, the meeting of the Tutor Perini shareholders to approve the merger, did not provide shareholders with enough information regarding the merger; that the exchange ratio in the merger agreement was not fair to the Tutor Perini shareholders; and that Tutor Perini’s board of directors allegedly breached its fiduciary duties by, among other things, allegedly failing to examine strategic alternatives to the merger. The complaint sought, among        other forms of relief, certification of the case as a class action, injunctive relief to enjoin the proposed merger, rescission in the event that the merger is consummated before a judgment in the case is entered, and damages.

On December 3, 2008, the District Court remanded the case to Middlesex County Superior Court. Defendants renewed their motions to dismiss, and the court scheduled a hearing on these motions for February 27, 2009.   Prior to the Superior Court deciding defendants’ dismissal motions, the parties stipulated to plaintiff voluntarily dismissing her        case, without prejudice. Pursuant to the stipulation, no compensation, attorney fees, or costs were paid or promised to be paid to the plaintiff by any of the defendants. The Superior Court entered an order dismissing the case on April 3, 2009.

***Adams Derivative Lawsuit***

On October 7, 2008, an individual named Kathy Adams, allegedly derivatively on behalf of Tutor Perini, filed a suit in Middlesex County, Massachusetts, Superior Court (*Adams v. Tutor, et al.,*(Massachusetts Superior Court, Middlesex County, No.        08-3740)), against defendants Ronald N. Tutor, Willard W. Brittain, Jr., Michael Klein, Robert A. Kennedy, Raymond R. Oneglia, Robert L. Miller, Peter Arkley, Robert Band and C.L. Max Nikias, as well as Tutor Perini itself as a nominal defendant. Adams did not make a demand on the board of directors before filing this derivative lawsuit. On November 14, 2008, Adams voluntarily dismissed her case without prejudice. On January 28, 2009, Adams sent Tutor Perini’s board of directors a        letter demanding that the board commence an investigation of potential claims against the defendants for alleged breaches of their fiduciary duties owed to Tutor Perini resulting from alleged failures to disclose purported problems with the company’s Las Vegas construction projects. Pursuant to the recommendation of the Litigation Committee formed by Tutor Perini’s board of directors to consider the matter, the board formeda Special        Litigation Committee(“SLC”)to investigate Adams’ allegations. That action was communicated to Adams’ counsel on April 27, 2009.The SLC has retained an independent counsel (“IC”) to conduct the investigation. The IC’s investigation is underway.

 

32

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**Part II. - Other Information****(continued)**

*Item 1A. Risk Factors*

Information regarding risk factors affecting the Company’s business is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. There have been no material changes from those risk factors during 2009.

*Item 2. Unregistered Sales of Equity Securities and Use of Proceeds*

        None.

*Item 3. Defaults Upon Senior Securities*

       None.

*Item 4. Submission of Matters to a Vote of Security Holders*

|  | (a)      | The Company’s Annual Meeting of Stockholders was held on May 28, 2009. |
|--|-----------------------------------|------------------------------------------------------------------------------|

|  | (b)      | Not applicable. |
|--|-----------------------------------|-----------------|

|  | (c)      | Results of voting at the 2009 Annual Meeting of Stockholders were as follows: |
|--|-----------------------------------|-------------------------------------------------------------------------------|

|  | (1)      | Each of the following persons was elected by the holders of common stock as a Class I Director to hold office for a three-year term expiring 2012 and until their successors are duly elected and qualified: |
|--|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 | **Number of Votes** |
|----------------------|---------------------|
| **Class I Director** | **For**             |   | **Authority Withheld** |
| Robert Band          | 45,556,967          |   | 1,193,492 |
| Robert L. Miller     | 45,816,344          |   | 934,115 |
| Michael R. Klein     | 44,315,204          |   | 2,435,255 |

|  | (2)      | A proposal to amend the Company’s amended and restated articles of organization to change the name of the Company to Tutor Perini Corporation was approved by the holders of common stock with the following vote: |
|--|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For              | 46,354,947 |
|------------------|------------|
| Against          | 359,637    |
| Abstain          | 35,875     |
| Broker Non Votes | 1          |

|  | (3)      | A proposal to approve the Section 162(m) performance goals and annual grant limitations under the Company’s 2004 Stock Option and Incentive Plan was approved by the holders of common stock with the following vote: |
|--|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For              | 45,292,921 |
|------------------|------------|
| Against          | 1,399,529  |
| Abstain          | 58,009     |
| Broker Non Votes | 1          |

33

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**Part II. - Other Information****(continued)**

|  | (4)      | A proposal to approve the Company’s 2009 General Incentive Compensation Plan was approved by holders of common stock with the following vote: |
|--|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| For              | 45,549,794 |
|------------------|------------|
| Against          | 954,262    |
| Abstain          | 246,403    |
| Broker Non Votes | 1          |

*Item 5. Other Information*             

None.

*Item 6. Exhibits*

| Exhibit 2.1   | Agreement and Plan of Merger, dated as of April 2, 2008, by and among Perini Corporation, Trifecta Acquisition LLC, Tutor-Saliba Corporation, Ronald N. Tutor and shareholders of Tutor-Saliba Corporation signatory thereto (incorporated by reference to Exhibit 2.1 to Form 8-K filed on                    April 7, 2008).                    |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 2.2   | Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 28, 2008, by and among Perini Corporation, Trifecta Acquisition LLC, Tutor-Saliba Corporation, Ronald N. Tutor and shareholders of Tutor-Saliba Corporation signatory thereto (incorporated by reference to Exhibit 2.2 to                    Form 10-Q filed on August 8, 2008). |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.1   | Restated Articles of Organization (incorporated by reference to Exhibit 4 to Form S-2 (File No. 33-28401) filed on April 28, 1989).                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.2   | Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form S-1 (File No. 333-111338) filed on December 19, 2003).                                                                                                                                                          |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.3   | Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 12, 2000).                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.4   | Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on September 11, 2008).                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.5   | Articles of Amendment to the Restated Articles of Organization of Perini Corporation – filed herewith.                                                                                                                                                                                                                                           |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.6   | Amended and Restated By-laws of Perini Corporation (incorporated by reference to Exhibit 3.2 of Form 8-K (File No. 001-06314) filed on February 14, 1997).                                                                                                                                                                                             |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.7   | Amendment No. 1 to the Amended and Restated By-laws of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form 8-K filed on April 12, 2000).                                                                                                                                                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| Exhibit 3.8   | Amendment No. 2 to the Amended and Restated By-laws of Perini Corporation (incorporated by reference to Exhibit 3.7 to Form 10-Q filed on November 7, 2008).                                                                                                                                                                                           |
|          |                                                                                                                                                                                                                                                                                                                                                   |
| +Exhibit 10.1 | 2004 Stock Option and Incentive Plan (incorporated by reference to Annex A to the Company’s Definitive Proxy Statement on Form DEF 14A filed on April 17, 2009).                                                                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                   |

34

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**Part II. - Other Information****(continued)**

| +Exhibit 10.2 | 2009 General Incentive Compensation Plan (incorporated by reference to Annex B to the Company’s Definitive Proxy Statement on Form DEF 14A filed on April 17, 2009).    |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                          |
| Exhibit 31.1  | Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley

Act of 2002 – filed herewith.                                                   |
|          |                                                                                                                                                                          |
| Exhibit 31.2  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley

Act of 2002 – filed herewith.                                               |
|          |                                                                                                                                                                          |
| *Exhibit 32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
|          |                                                                                                                                                                          |
| *Exhibit 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith. |

* These certifications are being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are not being filed as part of this Quarterly Report on Form 10-Q or as a separate disclosure document.                  + Management contract or compensatory plan.

 

35          

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.          

|                 | ***Tutor Perini Corporation***                                       |
|----------------------|----------------------------------------------------------------------|
|                 | Registrant                                                           |
|                 |                                                                 |
|                 |                                                                 |
|                 |                                                                 |
| Date: August 7, 2009 | /s/Kenneth R. Burk                                                   |
|                 | Kenneth R. Burk, ExecutiveVice President and Chief Financial Officer |
|                 | Duly Authorized Officer and Principal FinancialOfficer               |

 

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