Foster Wheeler Ltd. (Nasdaq: FWLT) today announced record full-year
and quarterly net income for the period ended December 29, 2006.
Net income for the full year 2006 was $196.4 million, or $2.78 per
diluted share, excluding (i) an asbestos-related net gain of $100.1
million, (ii) $27.4 million in charges relating to successful debt
reduction initiatives and the voluntary termination of the
Company�s former domestic credit agreement, and (iii) $7.1 million
in costs relating to the closure of the Global Power Group�s (GPG)
Canadian office. The $196.4 million is a new earnings record and is
more than double the Company�s previous record. Including the items
listed above, net income for the year was $262.0 million, or $3.43
per diluted share. The Company also reported record quarterly net
income for the third consecutive quarter. Net income for the fourth
quarter of 2006 was $85.9 million, or $1.20 per diluted share,
excluding (i) an asbestos-related provision of $15.5 million, (ii)
$0.1 million in costs arising from the voluntary termination of the
Company�s former domestic credit agreement, and (iii) the $7.1
million in costs relating to the closure of the GPG�s Canadian
office. Including these items, net income for the quarter was $63.1
million, or $0.88 per diluted share. �2006 was an outstanding year
for Foster Wheeler. I would like to congratulate our management
team and recognize all of our employees worldwide for transforming
the earning capability of this company to a level that far exceeds
any prior period in our Company�s 116-year history,� said Raymond
J. Milchovich, chairman and chief executive officer. �The
combination of the commercial and operational excellence
demonstrated by our Global E&C Group and its 47 percent
increase in capacity during 2006 has driven our Company�s earnings
and earnings growth and positioned us for a very bright future.�
EBITDA Consolidated EBITDA for the full-year 2006, also a new
Company record, was $333.9 million, excluding (i) the $100.1
million asbestos-related net gain, (ii) the $27.4 million in
charges relating to successful debt reduction initiatives and the
voluntary termination of the Company�s former domestic credit
agreement, and (iii) the $7.1 million in costs for the closure of
the GPG�s Canadian office. Including these items, full-year 2006
EBITDA was $399.5 million. Consolidated fourth quarter 2006 EBITDA
was $128.9 million, excluding (i) the asbestos-related provision of
$15.5 million, (ii) the $0.1 million costs arising from the
voluntary termination of the Company�s former domestic credit
agreement and (iii) the $7.1 million costs relating to the closure
of the GPG�s Canadian office. Including these items, fourth-quarter
2006 EBITDA was $106.1 million. The Company began recording stock
option compensation expense in 2006. $1.7 million and $7.3 million,
respectively, were expensed in the fourth quarter and full-year
2006. New Orders, Revenues and Backlog New orders for the full-year
2006, measured in Foster Wheeler scope, which excludes flow-through
costs, increased to $3.0 billion, up 18 percent from $2.6 billion
in 2005. Scope operating revenues for the full-year 2006 increased
to $2.8 billion, up by 56 percent from $1.8 billion in 2005.
Year-end 2006 scope backlog increased to $2.5 billion, up 17
percent from $2.2 billion at year-end 2005. Cash and Liquidity The
Company had a record $630.0 million of cash and short-term
investments at year-end 2006. This total cash balance compares with
$509.7 million at the end of the third quarter of 2006, and $372.7
million at year-end 2005. The substantial cash increase during 2006
resulted primarily from net cash generated by operations of $263.7
million, driven by the very strong operating performance in the
Global E&C Group. Asbestos The Company recorded a net gain from
its asbestos management program in 2006 of $100.1 million,
reflecting (i) a $115.6 million gain from four insurance
settlements and the successful appeal of a court decision in the
Company�s pending asbestos-related insurance coverage litigation,
and (ii) a $15.5 million charge in the fourth quarter of 2006
resulting from the Company�s year-end update of its 15-year
estimate of its asbestos liabilities and related assets.
Calculation of EBITDA EBITDA is a supplemental, non-generally
accepted accounting principle financial measure. EBITDA is defined
as income before income taxes, interest expense, depreciation and
amortization. The Company has presented EBITDA because it believes
it is an important supplemental measure of operating performance.
EBITDA, after adjustment for certain unusual and infrequent items
specifically excluded in the terms of the Company�s current and
prior senior credit agreements, is used for certain covenants under
its current and prior senior credit agreements. The Company
believes that the line item on its consolidated statement of
operations and comprehensive income/(loss) entitled �net
income/(loss)� is the most directly comparable generally accepted
accounting principle (�GAAP�) financial measure to EBITDA. Since
EBITDA is not a measure of performance calculated in accordance
with GAAP, it should not be considered in isolation of, or as a
substitute for, net income/(loss) as an indicator of operating
performance or any other GAAP financial measure. EBITDA, as
calculated by the Company, may not be comparable to similarly
titled measures employed by other companies. In addition, this
measure does not necessarily represent funds available for
discretionary use, and is not necessarily a measure of the
Company�s ability to fund its cash needs. As EBITDA excludes
certain financial information compared with net income/(loss), the
most directly comparable GAAP financial measure, users of this
financial information should consider the type of events and
transactions that are excluded. The Company�s non-GAAP performance
measure, EBITDA, has certain material limitations as follows: It
does not include interest expense. Because the Company has borrowed
money to finance some of its operations, interest is a necessary
and ongoing part of its costs and has assisted the Company in
generating revenue. Therefore, any measure that excludes interest
has material limitations; It does not include taxes. Because the
payment of taxes is a necessary and ongoing part of the Company�s
operations, any measure that excludes taxes has material
limitations; It does not include depreciation. Because the Company
must utilize substantial property, plant and equipment in order to
generate revenues in its operations, depreciation is a necessary
and ongoing part of its costs. Therefore, any measure that excludes
depreciation has material limitations. Notes to Editor: 1. Foster
Wheeler scope (�scope�): metrics measured in Foster Wheeler scope
exclude third-party costs incurred by the Company on a reimbursable
basis as agent or principal on which no markup is earned (i.e.,
flow-through costs). 2. Consolidated Statements, including
reconciliation of EBITDA, follow. 3. Foster Wheeler will conduct a
conference call with analysts today, February 27, at 3:00 p.m.
(Eastern). The call will be accessible to the public by telephone
or Webcast. To listen to the call by telephone in the United
States, dial 866-425-6195 (conference I.D. No.8409079#)
approximately ten minutes before the call. International access is
available by dialing 973-935-8572 (conference I.D. No. 8409079#).
The conference call will also be available over the Internet at
www.fwc.com or through StreetEvents at www.streetevents.com. A
replay of the call will be available on the company's Web site as
well as by telephone. To listen to the replay by telephone, dial
877-519-4471 or 973-341-3080 (replay passcode 8409079# required)
starting one hour after the conclusion of the call through 8:00
p.m. (Eastern) on Tuesday, March 13, 2007. The replay can also be
accessed on the company's Web site for two weeks following the
call. 4. Foster Wheeler Ltd. is a global company offering, through
its subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemicals, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA. For more information about Foster Wheeler, please
visit our Web site at http://www.fwc.com. 5. Safe Harbor Statement
This press release may contain forward-looking statements that are
based on the Company�s assumptions, expectations and projections
about Foster Wheeler and the various industries within which it
operates. These include statements regarding the Company�s
expectation about revenues (including as expressed by its backlog),
its liquidity, the outcome of litigation and legal proceedings and
recoveries from customers for claims, and the costs of current and
future asbestos claims and the amount and timing of related
insurance recoveries. Such forward-looking statements by their
nature involve a degree of risk and uncertainty. The Company
cautions that a variety of factors, including but not limited to
the factors described under Part II, Item 1A. �Risk Factors� in its
most recent quarterly report on Form 10-Q, could cause business
conditions and results to differ materially from what is contained
in forward-looking statements: changes in the rate of economic
growth in the United States and other major international
economies; changes in investment by the oil and gas, oil refining,
chemical/petrochemical and power industries; changes in the
financial condition of the Company�s customers; changes in
regulatory environment; changes in project design or schedules;
contract cancellations; changes in the Company�s estimates of costs
to complete projects; changes in trade, monetary and fiscal
policies worldwide; currency fluctuations; war and/or terrorist
attacks on facilities either owned or where equipment or services
are or may be provided; interruptions to shipping lanes or other
methods of transport; outcomes of pending and future litigation,
including litigation regarding the Company�s liability for damages
and insurance coverage for asbestos exposure; protection and
validity of the Company�s patents and other intellectual property
rights; increasing competition by foreign and domestic companies;
compliance with the Company�s debt covenants; recoverability of
claims against the Company�s customers and others by the Company
and claims by third parties against the Company; and changes in
estimates used in the Company�s critical accounting policies. Other
factors and assumptions not identified above were also involved in
the formation of these forward-looking statements and the failure
of such other assumptions to be realized, as well as other factors,
may also cause actual results to differ materially from those
projected. Most of these factors are difficult to predict
accurately and are generally beyond the Company�s control. You
should consider the areas of risk described above in connection
with any forward-looking statements that may be made by the
Company. Foster Wheeler undertakes no obligation to publicly update
any forward-looking statements, whether as a result of new
information, future events or otherwise. You are advised, however,
to consult any additional disclosures the Company makes in proxy
statements, quarterly reports on Form 10-Q, annual reports on Form
10-K and current reports on Form 8-K filed with the Securities and
Exchange Commission. Foster Wheeler Ltd. and Subsidiaries
Consolidated Statement of Operations - Summary (in thousands of
dollars, except share data and per share amounts) Unaudited � Three
months ended Year ended December 29, 2006 December 30, 2005
December 29, 2006 � December 30, 2005 � Unfilled orders $
5,431,400� $ 3,692,300� $ 5,431,400� $ 3,692,300� New orders booked
� 368,200� � 1,318,100� � 4,892,200� � 4,163,000� � Operating
revenues $ 1,193,319� $ 618,516� $ 3,495,048� $ 2,199,955� Cost of
operating revenues � (1,022,981) � (545,776) � (2,987,261) �
(1,853,613) Contract profit 170,338� 72,740� 507,787� 346,342� �
Selling, general & administrative expenses (65,760) (63,100)
(225,330) (216,691) Other income 22,479� 19,338� 63,729� 63,723�
Other deductions (12,383) (10,845) (45,453) (36,529) Interest
expense (5,141) (9,206) (24,944) (50,618) Minority interest (1,538)
521� (4,789) (4,382) Net asbestos-related gains/ (provision)
(15,533) (113,680) 100,131� (113,680) Prior domestic senior credit
agreement fees and expenses (132) 0� (14,955) 0� Loss on debt
reduction initiatives � 0� � (16,833) � (12,483) � (58,346)
Income/(loss) before income taxes 92,330� (121,065) 343,693�
(70,181) Provision for income taxes � (29,222) � (1,097) � (81,709)
� (39,568) Net income/(loss) 63,108� (122,162) 261,984� (109,749) �
Other comprehensive income/(loss): Foreign currency translation
adjustment 34,375� (25,534) 31,612� (22,928) Minimum pension
liability adjustment, net of tax 40,625� 4,875� 40,087� 4,875� Net
gain on derivative instruments designated as cash flow hedges, net
of tax 1,038� 0� 342� 0� Net comprehensive income/(loss) $ 139,146�
$ (142,821) $ 334,025� $ (127,802) � Earnings/(loss) per common
share: Basic $ 0.92� $ (2.27) $ 3.65� $ (2.36) Diluted $ 0.88� $
(2.27) $ 3.43� $ (2.36) � Shares Outstanding: Weighted-average
number of common shares outstanding for basic earnings/(loss) per
common share 68,377,674� 53,916,436� 66,498,192� 46,570,088� �
Weighted-average number of common shares outstanding for diluted
earnings/(loss) per common share 71,447,359� 53,916,436�
70,608,988� 46,570,088� Foster Wheeler Ltd. and Subsidiaries Major
Business Groups (in thousands of dollars) Unaudited � Three months
ended Year ended December 29, 2006 December 30, 2005 December 29,
2006 December 30, 2005 Global Engineering & Construction Group
Unfilled orders - in future revenues $ 4,501,500� $ 2,730,700� $
4,501,500� $ 2,730,700� New orders booked - in future revenues
225,100� 917,300� 3,695,300� 3,080,900� Operating revenues 703,722�
427,033� 2,219,104� 1,471,948� EBITDA 102,270� 32,077� 323,297�
165,629� � Foster Wheeler Scope (1): Unfilled orders 1,611,500�
1,212,400� 1,611,500� 1,212,400� New orders booked 216,800�
301,500� 1,839,400� 1,495,700� Operating revenues 439,100� 273,300�
1,530,300� 1,072,500� � Global Power Group Unfilled orders - in
future revenues 929,900� 961,600� 929,900� 961,600� New orders
booked - in future revenues 143,100� 400,800� 1,196,900� 1,082,100�
Operating revenues 489,597� 191,490� 1,275,944� 728,024� EBITDA
38,697� 17,092� 95,039� 107,266� � Foster Wheeler Scope (1):
Unfilled orders 916,700� 947,300� 916,700� 947,300� New orders
booked 140,500� 397,400� 1,185,300� 1,068,900� Operating revenues
485,800� 188,000� 1,263,200� 714,800� � Corporate and Financial
Services (2) Unfilled orders - in future revenues 0� 0� 0� 0� New
orders booked - in future revenues 0� 0� 0� 0� Operating revenues
0� (7) 0� (17) EBITDA (34,903) (154,174) (18,822) (264,243) �
Consolidated Unfilled orders - in future revenues 5,431,400�
3,692,300� 5,431,400� 3,692,300� New orders booked - in future
revenues 368,200� 1,318,100� 4,892,200� 4,163,000� Operating
revenues 1,193,319� 618,516� 3,495,048� 2,199,955� EBITDA 106,064�
(105,005) 399,514� 8,652� � Foster Wheeler Scope (1): Unfilled
orders 2,528,200� 2,159,700� 2,528,200� 2,159,700� New orders
booked 357,300� 698,900� 3,024,700� 2,564,600� Operating revenues
924,900� 461,300� 2,793,500� 1,787,300� � (1) Foster Wheeler Scope
represents that portion of unfilled orders, new orders booked and
operating revenues on which profit can be earned. Foster Wheeler
Scope excludes third party costs incurred by us as agent or
principal on a reimburseable basis. (2) Includes intersegment
eliminations Foster Wheeler Ltd. and Subsidiaries Major Business
Groups (in thousands of dollars) Unaudited � Three months ended
Year ended December 29, 2006 December 30, 2005 December 29, 2006
December 30, 2005 Global Engineering & Construction Group �
EBITDA $ 102,270� $ 32,077� $ 323,297� $ 165,629� Less: Interest
expense (2,383) (3,042) (12,020) (13,145) Less:
Depreciation/amortization � (3,071) � (1,702) � (9,766) � (7,234)
Income before income taxes 96,816� 27,333� 301,511� 145,250�
Provision for income taxes � (35,401) � 5,687� � (89,696) �
(27,652) Net income � 61,415� � 33,020� � 211,815� � 117,598� �
Global Power Group � EBITDA 38,697� 17,092� 95,039� 107,266� Less:
Interest expense (1,431) (4,888) (20,724) (26,131) Less:
Depreciation/amortization � (5,181) � (4,808) � (19,748) � (19,508)
Income before income taxes 32,085� 7,396� 54,567� 61,627� Provision
for income taxes � (13,773) � (7,990) � (26,536) � (19,191) Net
income/(loss) � 18,312� � (594) � 28,031� � 42,436� � Corporate and
Financial Services (1) � EBITDA (34,903) (154,174) (18,822)
(264,243) Add/Less: Eliminations / (interest expense) (1,327)
(1,276) 7,800� (11,342) Less: Depreciation/amortization � (341) �
(344) � (1,363) � (1,473) Income/(loss) before income taxes
(36,571) (155,794) (12,385) (277,058) Benefit/(provision) for
income taxes � 19,952� � 1,206� � 34,523� � 7,275� Net
income/(loss) � (16,619) � (154,588) � 22,138� � (269,783) �
Consolidated � EBITDA 106,064� (105,005) 399,514� 8,652� Less:
Interest expense (5,141) (9,206) (24,944) (50,618) Less:
Depreciation/amortization � (8,593) � (6,854) � (30,877) � (28,215)
Income/(loss) before income taxes 92,330� (121,065) 343,693�
(70,181) Provision for income taxes � (29,222) � (1,097) � (81,709)
� (39,568) Net income/(loss) � 63,108� � (122,162) � 261,984� �
(109,749) � (1) Includes intersegment eliminations Foster Wheeler
Ltd. and Subsidiaries Consolidated Balance Sheet (in thousands of
dollars) Unaudited � December 29, December 30, ASSETS 2006� 2005�
Current Assets: Cash and cash equivalents $ 610,887� $ 350,669�
Accounts and notes receivable, net Trade 483,819� 263,782� Other
83,497� 56,818� Contracts in process 159,121� 139,328� Prepaid,
deferred and refundable income taxes 20,708� 20,999� Other current
assets � 31,288� � 19,927� Total current assets � 1,389,320� �
851,523� Land, buildings and equipment, net 302,488� 258,672�
Restricted cash 19,080� 21,994� Notes and accounts receivable �
long-term 5,395� 5,076� Investment and advances 167,186� 168,193�
Goodwill, net 51,573� 50,982� Other intangible assets, net 62,004�
64,066� Asbestos-related insurance recovery receivable 350,322�
321,008� Other assets 91,081� 98,621� Deferred income taxes �
127,574� � 54,571� TOTAL ASSETS $ 2,566,023� $ 1,894,706� �
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY/(DEFICIT)
Current Liabilities: Current installments on long-term debt $
21,477� $ 21,459� Accounts payable 263,715� 233,815� Accrued
expenses 288,658� 300,457� Billings in excess of costs and
estimated earnings on uncompleted contracts 622,422� 410,676�
Income taxes � 51,331� � 31,157� Total current liabilities �
1,247,603� � 997,564� � Long-term debt 181,492� 293,953� Deferred
income taxes 66,522� 37,406� Pension, postretirement and other
employee benefits 385,976� 269,147� Asbestos-related liability
424,628� 466,163� Other long-term liabilities 166,169� 141,107�
Deferred accrued interest on subordinated deferrable interest
debentures 0� 2,697� Minority interest 29,923� 27,827� Commitments
and contingencies � � TOTAL LIABILITIES � 2,502,313� � 2,235,864� �
Temporary Equity: Non-vested restricted share awards subject to
redemption � 983� � 0� TOTAL TEMPORARY EQUITY � 983� � 0� �
Shareholders' Equity/(Deficit): Preferred shares 0� 0� Common
shares 690� 575� Paid-in capital 1,349,492� 1,187,518� Accumulated
deficit (944,113) (1,206,097) Accumulated other comprehensive loss
(343,342) (314,796) Unearned compensation � 0� � (8,358) TOTAL
SHAREHOLDERS� EQUITY/(DEFICIT) � 62,727� � (341,158) TOTAL
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY/(DEFICIT) $
2,566,023� $ 1,894,706� Foster Wheeler Ltd. and Subsidiaries
Earnings Per Common Share Reconciliation (in thousands of dollars,
except per share amounts) Unaudited � Three months ended Year ended
December 29, 2006 December 29, 2006 � Net Earnings Fully
DilutedEarnings/Share Net Earnings Fully DilutedEarnings/Share Net
income and earnings per common share, as adjusted $ 85,894� $ 1.20�
$ 196,412� $ 2.78� � Add back: Net asbestos-related
gains/(provision) (15,533) (0.22) 100,131� 1.42� Prior domestic
senior credit agreement fees and expenses (132) 0.00� (14,955)
(0.21) Loss on debt reduction initiatives (12,483) (0.18) Closure
of GPG Canadian operations (7,121) (0.10) (7,121) (0.10) Fair value
of additional shares issued as part of the warrant offers (impacts
earnings per share only) � 0� � 0.00� � 0� � (0.28) Net income and
earnings per common share, as reported $ 63,108� $ 0.88� $ 261,984�
$ 3.43�
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