FWLT (MM)

Foster Wheeler Ltd. (Nasdaq: FWLT) today reported net income for the fourth quarter of 2007 of $78.1 million, or $0.54 per diluted share, compared with $63.1 million, or $0.44 per diluted share, in the fourth quarter of 2006. Net income in both quarterly periods was impacted by certain non-operating items as detailed in the attached table. Excluding such items from both quarterly periods, net income in the fourth quarter of 2007 was $80.6 million, or $0.56 per diluted share, compared with $85.9 million, or $0.60 per diluted share, in the fourth quarter of 2006. Fourth-quarter 2007 consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was $132.0 million, compared with $106.1 million in the fourth quarter of 2006. Consolidated EBITDA in both quarterly periods was also impacted by certain non-operating items as noted above and as detailed in the attached table. Excluding such items from both quarterly periods, consolidated EBITDA in the fourth quarter of 2007 was $134.5 million, compared with $128.9 million in the fourth quarter of 2006. For the full year 2007, net income was a record $393.9 million, or $2.72 per diluted share, compared with $262.0 million, or $1.72 per diluted share, in 2006. For the full year 2007, consolidated EBITDA was a record $591.8 million, compared with $399.5 million for 2006. Net income and consolidated EBITDA in 2007 and 2006 were impacted by certain non-operating items as detailed in the attached table. Excluding such items from both periods, net income in 2007 was $387.7 million, or $2.68 per diluted share, compared with $196.4 million, or $1.39 per diluted share, in 2006; and consolidated EBITDA for 2007 was $585.7 million, compared with $333.9 million in 2006. Commenting on the company�s 2007 results, Foster Wheeler�s Chairman and Chief Executive Officer, Raymond J. Milchovich, said, �The combination of strong demand and overall excellence in contract execution enabled the company to generate record-level financial results in 2007. In particular, both of our operating segments reported double-digit percentage increases in EBITDA, and the company's adjusted net income�nearly doubled. Moreover, the company ended the year with�record-levels of scope backlog.� Milchovich noted, �We reported solid results for the fourth quarter of 2007. However, EBITDA was below the average of the first three quarters of the year because of reduced EBITDA in our Global Engineering and Construction (E&C) Group due to three factors. First, E&C experienced an $8.3 million negative impact due to the repeal of an Italian power price tariff, which had been enacted in the third quarter of 2007, as a result of a court ruling in the country. Second, we experienced fewer profit-enhancing opportunities such as bonuses and incentives during the quarter as compared to the early part of the year due to portfolio mix and contract timing. Finally, E&C took a $5 million reserve on one reimbursable contract due to issues with the client over project scope growth. We�re hopeful that this matter will be favorably resolved in future periods but felt that it was appropriate to reserve for it at this time.� Milchovich added, �As we look at 2008, we continue to be very positive about the markets that both our businesses serve and about our position as we enter the year. In our E&C Group, consistent with what we�ve been saying for months, we expect meaningful organic growth and sustainable margins. We�re hopeful that this can be complemented by growth through strategic acquisitions during the year as well. In our Global Power Group, as we�ve previously stated, we remain confident that we will enjoy a material level of margin improvement and revenue growth during the year given our position and momentum entering 2008.� 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 upstream oil and gas, LNG and gas-to-liquids, refining, petrochemicals, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The company 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 www.fwc.com. Calculation of EBITDA EBITDA is a supplemental financial measure not defined in generally accepted accounting principles or 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 consolidated statements of operations and comprehensive income/(loss) entitled "net income/(loss)" 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/(loss), 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; and 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. Foster Wheeler Scope 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. The Company began comprehensively reporting Foster Wheeler Scope as of 2005. Conference Call Information Foster Wheeler Ltd. plans to hold a conference call today, Tuesday, February 26, at 12:00 noon (Eastern) to discuss its financial results for the fourth quarter and fiscal year ended December 28, 2007. The call will be accessible to the public by telephone or webcast, and the company will post an accompanying slide presentation in the investor relations section of its web site (www.fwc.com). To listen to the call by telephone, dial 973-935-8752 (conference I.D. No. 31698780#) approximately ten minutes before the call. 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 706-645-9291 (replay passcode 31698780# required) starting one hour after the conclusion of the call through 8:00 p.m. (Eastern) on Tuesday, March 25, 2008. The replay can also be accessed on the company's web site for four weeks following the call. Safe Harbor Statement Foster Wheeler news releases may contain 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 in Part I, Item 1A �Risk Factors� of 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 environments, 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, compliance with laws and regulations relating to its global operations, 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, and 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 Twelve months ended December 28, 2007 � � December 29, 2006 � � December 28, 2007 � � December 29, 2006 � � Unfilled orders $ 9,420,400 $ 5,431,400 $ 9,420,400 $ 5,431,400 New orders booked � 4,604,500 � � 368,200 � � 8,882,800 � � 4,892,200 � � Operating revenues $ 1,465,483 $ 1,193,319 $ 5,107,243 $ 3,495,048 Cost of operating revenues � (1,295,480 ) � (1,022,981 ) � (4,362,922 ) � (2,987,261 ) Contract profit 170,003 170,338 744,321 507,787 � Selling, general & adminis-trative expenses (66,158 ) (65,760 ) (246,237 ) (225,330 ) Other income 17,680 17,530 61,410 48,610 Other deductions (12,465 ) (12,383 ) (45,540 ) (45,453 ) Interest income 11,364 4,949 35,627 15,119 Interest expense (5,203 ) (5,141 ) (19,855 ) (24,944 ) Minority interest in income of consolidated affiliates (539 ) (1,538 ) (5,577 ) (4,789 ) Net asbestos- related gains/ (provision) (2,488 ) (15,533 ) 6,145 100,131 Prior domestic senior credit agreement fees and expenses 0 (132 ) 0 (14,955 ) Loss on debt reduction initiatives 0 0 0 (12,483 ) � � � � Income before income taxes 112,194 92,330 530,294 343,693 Provision for income taxes � (34,096 ) � (29,222 ) � (136,420 ) � (81,709 ) Net income $ 78,098 � $ 63,108 � $ 393,874 � $ 261,984 � � � Shares Outstanding: Weighted-average number of common shares outstanding for basic earnings per common share � 143,540,329 136,755,348 141,661,046 132,996,384 � Weighted-average number of common shares outstanding for diluted earnings per common share � 145,155,401 142,894,718 144,748,222 141,217,976 � � � � Earnings per common share: Basic $ 0.54 � $ 0.46 � $ 2.78 � $ 1.82 � Diluted $ 0.54 � $ 0.44 � $ 2.72 � $ 1.72 � Foster Wheeler Ltd. and Subsidiaries Consolidated Balance Sheet (in thousands of dollars) (unaudited) � � December 28, December 29, ASSETS 2007 2006 Current Assets: Cash and cash equivalents $ 1,048,544 $ 610,887 Accounts and notes receivable, net: Trade 580,883 483,819 Other 98,708 83,497 Contracts in process 239,737 159,121 Prepaid, deferred and refundable income taxes 36,532 21,016 Other current assets � 39,979 � � 31,288 � Total current assets � 2,044,383 � � 1,389,628 � � Land, buildings and equipment, net 337,485 302,488 Restricted cash 20,937 19,080 Notes and accounts receivable � long-term 2,941 5,395 Investments in and advances to unconsolidated affiliates 198,346 167,186 Goodwill, net 53,345 51,573 Other intangible assets, net 61,190 62,004 Asbestos-related insurance recovery receivable 324,588 350,322 Other assets 93,737 91,081 Deferred income taxes � 112,036 � � 126,792 � TOTAL ASSETS $ 3,248,988 � $ 2,565,549 � � LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY Current Liabilities: Current installments on long-term debt $ 19,368 $ 21,477 Accounts payable 372,531 263,715 Accrued expenses 331,814 288,658 Billings in excess of costs and estimated earnings on uncompleted contracts 744,236 622,422 Income taxes payable � 55,824 � � 51,331 � Total current liabilities � 1,523,773 � � 1,247,603 � � Long-term debt 185,978 181,492 Deferred income taxes 81,008 66,048 Pension, postretirement and other employee benefits 290,741 385,976 Asbestos-related liability 376,803 424,628 Other long-term liabilities 185,143 166,169 Minority interest 31,773 29,923 Commitments and contingencies � � TOTAL LIABILITIES � 2,675,219 � � 2,501,839 � � Temporary Equity: Non-vested restricted awards subject to redemption � 2,728 � � 983 � TOTAL TEMPORARY EQUITY � 2,728 � � 983 � � Shareholders' Equity: Preferred shares - - Common shares 1,439 1,382 Paid-in capital 1,385,311 1,348,800 Accumulated deficit (554,595 ) (944,113 ) Accumulated other comprehensive loss � (261,114 ) � (343,342 ) TOTAL SHAREHOLDERS� EQUITY � 571,041 � � 62,727 � TOTAL LIABILITIES, TEMPORARY EQUITY � � AND SHAREHOLDERS� EQUITY $ 3,248,988 � $ 2,565,549 � Foster Wheeler Ltd. and Subsidiaries Major Business Groups (in thousands of dollars) (unaudited) � � � � Three months ended Twelve months ended December 28, 2007 December 29, 2006 December 28, 2007 December 29, 2006 Global Engineering & Construction Group Unfilled orders - in future revenues $ 7,822,000 $ 4,501,500 $ 7,822,000 $ 4,501,500 New orders booked - in future revenues 3,999,400 225,100 6,874,600 3,695,300 Operating revenues 1,054,443 703,722 3,681,259 2,219,104 EBITDA 110,283 102,270 505,647 323,297 � Foster Wheeler Scope (1): Unfilled orders 1,709,100 1,611,500 1,709,100 1,611,500 New orders booked 603,500 216,800 2,150,800 1,839,400 Operating revenues 609,578 439,100 2,144,199 1,530,300 � Global Power Group Unfilled orders - in future revenues 1,598,400 929,900 1,598,400 929,900 New orders booked - in future revenues 605,100 143,100 2,008,200 1,196,900 Operating revenues 411,040 489,597 1,425,984 1,275,944 EBITDA 39,397 38,697 139,177 95,039 � Foster Wheeler Scope (1): Unfilled orders 1,585,500 916,700 1,585,500 916,700 New orders booked 602,500 140,500 1,996,000 1,185,300 Operating revenues 408,043 485,800 1,413,462 1,263,200 � Corporate & Finance Group (2) Unfilled orders - in future revenues 0 0 0 0 New orders booked - in future revenues 0 0 0 0 Operating revenues 0 0 0 0 EBITDA (17,712 ) (34,903 ) (52,984 ) (18,822 ) � Consolidated Unfilled orders - in future revenues 9,420,400 5,431,400 9,420,400 5,431,400 New orders booked - in future revenues 4,604,500 368,200 8,882,800 4,892,200 Operating revenues 1,465,483 1,193,319 5,107,243 3,495,048 EBITDA 131,968 106,064 591,840 399,514 � Foster Wheeler Scope (1): Unfilled orders 3,294,600 2,528,200 3,294,600 2,528,200 New orders booked 1,206,000 357,300 4,146,800 3,024,700 Operating revenues 1,017,621 924,900 3,557,661 2,793,500 � � � (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) (unaudited) � � � � Three months ended Twelve months ended December 28, 2007 December 29, 2006 December 28, 2007 December 29, 2006 Reconciliation of Consolidated EBITDA to Consolidated Net Income � EBITDA $ 131,968 $ 106,064 $ 591,840 $ 399,514 Less: Interest expense (5,203 ) (5,141 ) (19,855 ) (24,944 ) Less: Depreciation/ amortization (1) � (14,571 ) � (8,593 ) � (41,691 ) � (30,877 ) Income before income taxes 112,194 92,330 530,294 343,693 Provision for income taxes � (34,096 ) � (29,222 ) � (136,420 ) � (81,709 ) Net income $ 78,098 � $ 63,108 � $ 393,874 � $ 261,984 � � Reconciliation of Foster Wheeler Scope Operating Revenues to Operating Revenues � Global Engineering & Construction Group � Foster Wheeler Scope operating revenues $ 609,578 $ 439,100 $ 2,144,199 $ 1,530,300 Flow-through revenues � 444,865 � � 264,622 � � 1,537,060 � � 688,804 � Operating revenues � 1,054,443 � � 703,722 � � 3,681,259 � � 2,219,104 � � Global Power Group � Foster Wheeler Scope operating revenues 408,043 485,800 1,413,462 1,263,200 Flow-through revenues � 2,997 � � 3,797 � � 12,522 � � 12,744 � Operating revenues � 411,040 � � 489,597 � � 1,425,984 � � 1,275,944 � � Corporate & Finance Group � Foster Wheeler Scope operating revenues 0 0 0 0 Flow-through revenues � 0 � � 0 � � 0 � � 0 � Operating revenues � 0 � � 0 � � 0 � � 0 � � Consolidated � Foster Wheeler Scope operating revenues 1,017,621 924,900 3,557,661 2,793,500 Flow-through revenues � 447,862 � � 268,419 � � 1,549,582 � � 701,548 � Operating revenues $ 1,465,483 � $ 1,193,319 � $ 5,107,243 � $ 3,495,048 � � Three months ended Twelve months ended (1)The depreciation / amortization for the major business groups is: December 28, 2007 December 29, 2006 December 28, 2007 December 29, 2006 � Global Engineering & Construction Group $ (6,175 ) $ (3,071 ) $ (17,485 ) $ (9,766 ) Global Power Group (8,051 ) (5,181 ) (22,835 ) (19,748 ) Corporate & Finance Group � (345 ) � (341 ) � (1,371 ) � (1,363 ) Total depreciation / amortization $ (14,571 ) $ (8,593 ) $ (41,691 ) $ (30,877 ) Foster Wheeler Ltd. and Subsidiaries EBITDA and Earnings Per Common Share Reconciliation (in thousands of dollars, except per share amounts) � � � � � � Three Months Ended Twelve months ended December 28, 2007 December 28, 2007 � Diluted Diluted EBITDA Net Earnings � Earnings/Share � EBITDA Net Earnings Earnings/Share As adjusted $ 134,456 $ 80,586 $ 0.56 $ 585,695 $ 387,729 $ 2.68 � Add back: Net asbestos-related gains/(provision) (2,488 ) (2,488 ) (0.02 ) 6,145 6,145 0.04 � � � � � � As reported $ 131,968 � $ 78,098 � $ 0.54 � $ 591,840 � $ 393,874 � $ 2.72 � � � � � � Three Months Ended Twelve months ended December 29, 2006 December 29, 2006 � Diluted Diluted EBITDA Net Earnings � Earnings/Share � EBITDA Net Earnings Earnings/Share As adjusted $ 128,850 $ 85,894 $ 0.60 $ 333,942 $ 196,412 1.39 � Add back: Net asbestos-related gains/(provision) (15,533 ) (15,533 ) (0.11 ) 100,131 100,131 0.72 Prior domestic senior credit agreement fees and expenses (132 ) (132 ) (0.00 ) (14,955 ) (14,955 ) (0.11 ) Loss on debt reduction initiatives - - - (12,483 ) (12,483 ) (0.09 ) Closure of GPG Canadian operations (7,121 ) (7,121 ) (0.05 ) (7,121 ) (7,121 ) (0.05 ) Fair value of additional shares issued as part of the warrant offers (impacts earnings per share only) - - - - - (0.14 ) � � � � � � As reported $ 106,064 � $ 63,108 � $ 0.44 � $ 399,514 � $ 261,984 � $ 1.72 �