Foster Wheeler Ltd. (NASDAQ: FWLT) today announced record net
earnings of $114.8 million for the first quarter of 2007, compared
with $14.6 million for the first quarter of 2006. Earnings per
diluted share for the first quarter of 2007 were $1.60, compared
with a net loss per diluted share of $0.08 for the first quarter of
2006. The first-quarter 2006 net loss per diluted share included
the $0.29 per diluted share allocation of earnings to shares issued
to warrant holders who participated in the Company�s January 2006
warrant inducement offers. �I would like to congratulate all Foster
Wheeler employees worldwide for producing a fourth consecutive
record-breaking earnings quarter,� said Raymond J. Milchovich,
chairman and chief executive officer. �Our consistent pursuit of
commercial and operational excellence is clearly re-inventing the
earning capability of our 116-year-old company. Both of our
business groups delivered performance breakthroughs from the
year-ago quarter, the most notable of which are summarized below.�
Global Engineering & Construction (E&C) Group Q1'07 Q1'06 %
change Scope operating revenues (millions) $529.6 $298.3 +78%
EBITDA (millions) $141.1 $ 55.0 +157% EBITDA margin on scope
operating revenues 26.6% 18.4% +45% Scope bookings (millions)
$533.3 $422.7 +26% Scope backlog (billions) $ 1.60 $ 1.34 + 20%
Global Power Group Q1'07 Q1'06 % change Scope operating revenues
(millions) $324.8 $219.7 +48% EBITDA (millions) $ 37.0 $ 13.8 +168%
EBITDA margin on scope operating revenues 11.4% 6.3% +81% Scope
bookings (millions) $540.7 $411.2 +31% Scope backlog (billions) $
1.14 $ 1.15 -1% EBITDA First-quarter 2007 consolidated EBITDA
(earnings before interest expense, income taxes, depreciation and
amortization) increased by 254 percent to $162.3 million, up from
$45.9 million in the first quarter of 2006. New orders, revenues
and backlog The Company delivered another strong bookings quarter
with consolidated new orders measured in Foster Wheeler scope,
which excludes flow-through costs, increasing by 29 percent to
$1.07 billion in the first quarter of 2007, compared with $833.9
million in the first quarter of 2006. For the first quarter of
2007, consolidated operating revenues measured in Foster Wheeler
scope increased by 65 percent to $854.5 million, from $518.0
million for the year-ago quarter. Consolidated scope backlog
increased to $2.74 billion at the end of the first quarter of 2007
from $2.53 billion at the end of the fourth quarter of 2006, and
increased by 10 percent from the $2.49 billion scope backlog at the
end of the year-ago quarter. Capacity increase and market outlook
At the end of the first quarter of 2007, Foster Wheeler had nearly
13,000 employees worldwide. During the first quarter of 2007, the
Global E&C Group increased its direct manpower by 9 percent,
taking its total increase in direct manpower to 60 percent since
year-end 2005. The Global Power Group has also started to expand
its capacity and increased its total manpower by 3 percent during
the first quarter of 2007. The fundamentals supporting the markets
served by the Company�s Global E&C Group and Global Power Group
remain very robust, with strong global economic growth continuing
to drive investment in new and existing oil and gas, refinery,
petrochemical and power facilities. The Company plans to continue
to increase the capacity of its two business groups to capture the
opportunities offered by these very strong markets. Worldwide cash
and domestic liquidity As of March 30, 2007, total cash and
short-term investments were $612.6 million, compared with $630.0
million at December 29, 2006, and $425.6 million at the end of the
first quarter of 2006. During the first quarter of 2007, Foster
Wheeler contributed $35 million to its U.S. pension plans. This
contribution consisted of the acceleration of the $20 million
estimated full-year 2007 required payment and an additional $15
million voluntary contribution. The Company does not expect to be
required to make any further contributions to the U.S. pension
plans until 2011 or later. Working capital increased by $119.8
million during the first quarter of 2007. This resulted primarily
from the Company�s increasing volume of business, from the changing
business mix in its Global E&C Group, where a growing client
preference to award reimbursable, rather than lump-sum turnkey,
contracts creates increased levels of project working capital, and
from a mix of contracts booked by the Global Power Group that
involved a lower than normal amount of advance payments. Credit
rating upgrade Moody�s Investors Service (Moody�s) and Standard
& Poor's (S&P) recently raised Foster Wheeler's credit
ratings. Moody's raised the Company's corporate credit rating to
�Ba3� from �B1�, raised the credit rating assigned to Foster
Wheeler's five-year, $350 million senior secured domestic credit
facility to �Baa3� (investment grade) from �Ba1�, and confirmed
that its ratings outlook for Foster Wheeler remains �positive.�
S&P raised the Company's corporate credit rating to �BB� from
�B+�, and raised the credit rating assigned to the domestic credit
facility to �BB+� from �BB-.� Credit facility amendment Effective
May 4, 2007, the Company amended its $350 million, five-year senior
secured domestic credit facility to a) increase the facility by
$100 million, (b) reduce the pricing applicable to the $150 million
synthetic portion of the facility by 50 basis points per annum, and
(c) provide a new option to increase the facility by an additional
$100 million at a later date. The amendment to the facility
provides the increased bonding capacity that the Company requires
to support the continued growth of its operations and volume of
business. The facility�s improved pricing reflects the recent
upgrades to the Company�s credit ratings by Moody�s Investors
Service and Standard & Poor�s. The Company does not intend to
borrow under the facility during 2007. Calculation of EBITDA EBITDA
is a supplemental financial measure not defined in generally
accepted accounting principles (�GAAP�). The Company defines EBITDA
as income before interest expense, income taxes, 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 condensed consolidated statement
of operations and comprehensive income entitled �net income� is the
most directly comparable 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 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 that is
included in net income, 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 and amortization. Because the Company must
utilize property, plant and equipment and intangible assets in
order to generate revenues in its operations, depreciation and
amortization are necessary and ongoing costs of its operations.
Therefore, any measure that excludes depreciation and amortization
has material limitations. Notes to Editor: 1. Consolidated
Statements, including reconciliation of EBITDA, follow. 2. Foster
Wheeler scope � metrics expressed in Foster Wheeler scope, often
referred to as �scope,� represent that portion of the Company�s
operating revenues, new orders booked and backlog on which profit
is earned. Scope excludes revenues relating to third-party costs
incurred by the Company as agent or principal on a reimbursable
basis (�flow-through� costs). 3. Foster Wheeler will today conduct
a conference call, including a slide presentation, at 11:00 a.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. 8685505)
approximately ten minutes before the call. International access is
available by dialing 973-935-8752 (conference I.D. No. 8685505).
The conference call and the presentation slides will also be
available over the Internet at www.fwc.com or through StreetEvents
at www.streetevents.com. The presentation slides will be available
one hour before the call starts. A replay of the call, together
with the presentation slides, will be available on the company's
Web site and the call replay can also be accessed by telephone. The
replay and slide presentation can also be accessed on the company's
Web site for four weeks following the call. To listen to the replay
by telephone, dial 877-519-4471 or 973-341-3080 (replay passcode
8685505# required) starting one hour after the conclusion of the
call through 8:00 p.m. (Eastern) on Wednesday, June 6, 2007. 4.
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of engineering, procurement,
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,
petrochemical, 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, visit our
Web site at www.fwc.com. 5. Safe Harbor Statement This news release
contains forward-looking statements that are based on management�s
assumptions, expectations and projections about the Company and the
various industries within which the Company operates. These include
statements regarding the Company�s expectations regarding 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 the
heading �Business-Risk Factors of the Business� in the Company�s
most recent annual report on Form 10-K and the following, could
cause the Company�s 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 its customers,
changes in regulatory environment, changes in project design or
schedules, contract cancellations, changes in estimates made by the
Company 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 its patents and other intellectual
property rights, increasing competition by foreign and domestic
companies, compliance with its debt covenants, recoverability of
claims against its customers and others by the Company and clams by
third parties against the Company, changes in estimates used in its
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. The
Company 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
March 30, 2007 March 31, 2006 � Unfilled orders $ 5,706,500� $
4,553,400� New orders booked � 1,416,500� � 1,529,400� � Operating
revenues $ 1,152,122� $ 645,842� Cost of operating revenues �
(944,610) � (565,524) Contract profit 207,512� 80,318� � Selling,
general & administrative expenses (55,088) (50,139) Other
income 11,516� 15,755� Other deductions (8,172) (7,479) Interest
expense (4,725) (7,947) Minority interest in (income)/loss of
consolidated affiliates (2,309) 389� � � Income before income taxes
148,734� 30,897� Provision for income taxes � (33,909) � (16,266)
Net income $ 114,825� $ 14,631� � Shares Outstanding:
Weighted-average number of common shares outstanding for basic
earnings/(loss) per common share 69,753,876� 63,069,436� �
Weighted-average number of common shares outstanding for diluted
earnings/(loss) per common share 71,765,528� 63,069,436� �
Earnings/(loss) per common share: Basic $ 1.65� $ (0.08) Diluted $
1.60� $ (0.08) Foster Wheeler Ltd. and Subsidiaries Major Business
Groups (in thousands of dollars) Unaudited � Three months ended
March 30, 2007 March 31, 2006 Global Engineering & Construction
Group Unfilled orders - in future revenues $ 4,554,700� $
3,392,700� New orders booked - in future revenues 872,700�
1,115,200� Operating revenues 824,169� 423,153� EBITDA 141,133�
54,959� � Foster Wheeler Scope (1): Unfilled orders 1,601,500�
1,339,000� New orders booked 533,300� 422,700� Operating revenues
529,631� 298,300� � Global Power Group Unfilled orders - in future
revenues 1,151,800� 1,160,700� New orders booked - in future
revenues 543,800� 414,200� Operating revenues 327,953� 222,660�
EBITDA 37,024� 13,825� � Foster Wheeler Scope (1): Unfilled orders
1,138,500� 1,146,400� New orders booked 540,700� 411,200� Operating
revenues 324,822� 219,700� � Corporate and Finance Group (2)
Unfilled orders - in future revenues 0� 0� New orders booked - in
future revenues 0� 0� Operating revenues 0� 29� EBITDA (15,860)
(22,890) � Consolidated Unfilled orders - in future revenues
5,706,500� 4,553,400� New orders booked - in future revenues
1,416,500� 1,529,400� Operating revenues 1,152,122� 645,842� EBITDA
162,297� 45,894� � Foster Wheeler Scope (1): Unfilled orders
2,740,000� 2,485,400� New orders booked 1,074,000� 833,900�
Operating revenues 854,453� 518,000� � (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 revenues relating to third-party costs incurred by
us as agent or principal on a reimbursable basis. � (2) Includes
intersegment eliminations. Foster Wheeler Ltd. and Subsidiaries
Reconciliations of EBITDA and Foster Wheeler Scope (in thousands of
dollars) � Three months ended March 30, 2007 March 31, 2006
Reconciliation of Consolidated EBITDA to Consolidated Net Income �
EBITDA 162,297� 45,894� Less: Interest expense (4,725) (7,947)
Less: Depreciation/amortization (1) (8,838) (7,050) Income before
income taxes 148,734� 30,897� Provision for income taxes (33,909)
(16,266) Net income 114,825� 14,631� � � Reconciliation of Foster
Wheeler Scope Operating Revenues to Operating Revenues � Global
Engineering & Construction Group � Foster Wheeler Scope
operating revenues 529,631� 298,300� Flow-through revenues 294,538�
124,853� Operating revenues 824,169� 423,153� � Global Power Group
� Foster Wheeler Scope operating revenues 324,822� 219,700�
Flow-through revenues 3,131� 2,960� Operating revenues 327,953�
222,660� � Corporate & Finance Group � Foster Wheeler Scope
operating revenues 0� 0� Flow-through revenues 0� 29� Operating
revenues 0� 29� � Consolidated � Foster Wheeler Scope operating
revenues 854,453� 518,000� Flow-through revenues 297,669� 127,842�
Operating revenues 1,152,122� 645,842� � � � (1) The depreciation /
amortization for the major business groups is: Three months ended �
March 30, 2007 March 31, 2006 � Global Engineering &
Construction Group (3,478) (1,843) Global Power Group (5,019)
(4,868) Corporate & Finance Group (341) (339) Total
depreciation / amortization (8,838) (7,050) Foster Wheeler Ltd. and
Subsidiaries Condensed Consolidated Balance Sheet (in thousands of
dollars) Unaudited � March 30, December 29, ASSETS 2007� 2006�
Current Assets: Cash and cash equivalents $ 593,337� $ 610,887�
Accounts and notes receivable, net: Trade 515,485� 483,819� Other
87,699� 83,497� Contracts in process 210,521� 159,121� Prepaid,
deferred and refundable income taxes 21,305� 20,708� Other current
assets � 31,805� � 31,288� Total current assets � 1,460,152� �
1,389,320� � Land, buildings and equipment, net 302,145� 302,488�
Restricted cash 19,263� 19,080� Notes and accounts receivable �
long-term 5,069� 5,395� Investments in and advances to
unconsolidated affiliates 160,251� 167,186� Goodwill, net 51,648�
51,573� Other intangible assets, net 62,733� 62,004�
Asbestos-related insurance recovery receivable 339,047� 350,322�
Other assets 90,369� 91,081� Deferred income taxes � 124,302� �
127,574� TOTAL ASSETS $ 2,614,979� $ 2,566,023� � LIABILITIES,
TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY Current Liabilities:
Current installments on long-term debt $ 21,132� $ 21,477� Accounts
payable 258,387� 263,715� Accrued expenses 268,063� 288,658�
Billings in excess of costs and estimated earnings on uncompleted
contracts 603,150� 622,422� Income taxes payable � 64,035� �
51,331� Total current liabilities � 1,214,767� � 1,247,603� �
Long-term debt 182,242� 181,492� Deferred income taxes 68,511�
66,522� Pension, postretirement and other employee benefits
348,178� 385,976� Asbestos-related liability 401,659� 424,628�
Other long-term liabilities and minority interest 203,511� 196,092�
Commitments and contingencies � � TOTAL LIABILITIES � 2,418,868� �
2,502,313� � Temporary Equity: Non-vested restricted awards subject
to redemption � 1,821� � 983� TOTAL TEMPORARY EQUITY � 1,821� �
983� � Shareholders' Equity: Preferred shares 0� 0� Common shares
702� 690� Paid-in capital 1,361,107� 1,349,492� Accumulated deficit
(833,644) (944,113) Accumulated other comprehensive loss �
(333,875) � (343,342) TOTAL SHAREHOLDERS� EQUITY 194,290� 62,727� �
� � TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY $
2,614,979� $ 2,566,023�
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