FWLT (MM)

Foster Wheeler Ltd. (Nasdaq: FWLT) today reported record net income for the first quarter of 2008 of $138.1 million, or $0.95 per diluted share, compared with $114.8 million, or $0.80 per diluted share, in the first quarter of 2007. Net income in the first quarter of 2008 was aided by a net asbestos-related gain of $14.2 million. Excluding the gain, net income in the first quarter of 2008 was a record $123.9 million, or $0.85 per diluted share. First-quarter 2008 consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was a record $195.3 million, compared with $162.3 million in the first quarter of 2007. Excluding the net asbestos-related gain noted above, consolidated EBITDA in the first quarter of 2008 was a record $181.1 million. The following tables present average quarterly data for 2007. The company believes that such figures provide meaningful comparative relevance for certain key metrics in light of the significant quarter-to-quarter variability that is inherent in the company�s financial results. � � Q1 2008 � Q1 2007 � Average Qtr of 2007 Net income � $138 million � $115 million � $98 million Net income, as adjusted � $124 million � $115 million � $97 million Consolidated EBITDA � $195 million � $162 million � $148 million Consolidated EBITDA, as adjusted � $181 million � $162 million � $146 million Commenting on the company�s quarterly results, Foster Wheeler�s Chairman and Chief Executive Officer, Raymond J. Milchovich, said, �Our net income, as adjusted, in the first quarter of 2008 was a record and was up markedly from the average quarter of 2007. The results were largely attributable to the sharply improved performance of our Global Power Group and continued operational and commercial excellence in our Global Engineering and Construction Group.� Global Engineering and Construction (E&C) Group � � Q1 2008 � Q1 2007 � Average Qtr of 2007 New orders booked (FW Scope) � $613 million � $533 million � $538 million Operating revenues (FW Scope) � $547 million � $530 million � $536 million Segment EBITDA � $135 million � $141 million � $126 million EBITDA Margin � 24.6% � 26.6% � 23.6% Segment EBITDA was $134.5 million in the first quarter of 2008, an increase of 7% compared with the average quarter of 2007. EBITDA margin on scope revenue was 24.6% in the first quarter of 2008, compared with 23.6% for the full-year 2007. Operating revenues in Foster Wheeler Scope were $547.2 million in the first quarter of 2008, an increase of 2% compared with scope revenue for the average quarter of 2007. New orders booked in Foster Wheeler Scope were $612.5 million in the first quarter of 2008, an increase of 14% compared with the average quarter of 2007. Backlog in Foster Wheeler Scope was a record $1.8 billion at the end of the first quarter of 2008, up 13% compared with the year-ago period. At the end of the first quarter of 2008, the number of man-hours in backlog amounted to 14.2 million, an increase of 15% compared with the year-ago period. Global Power Group (GPG) � � Q1 2008 � Q1 2007 � Average Qtr of 2007 New orders booked (FW Scope) � $533 million � $541 million � $499 million Operating revenues (FW Scope) � $402 million � $325 million � $354 million Segment EBITDA � $64 million � $37 million � $35 million EBITDA Margin � 16% � 11.4% � 9.8% Segment EBITDA was $64.4 million in the first quarter of 2008, an increase of 83% compared with the average quarter of 2007. The results were driven by the company�s commercial and operational improvement initiatives. Results in the first quarter of 2008 were also aided by a commitment fee of $7.5 million and a $4.9 million increase in equity earnings due largely to higher electricity rates for a partially owned power plant in Chile. EBITDA margin on scope revenue was 16% in the first quarter of 2008, as compared to 9.8% for the full-year 2007. Excluding the 2007 impact of a $30 million reserve for a legacy power project, the average quarterly EBITDA was $42 million and the average EBITDA margin on scope revenue was 12%. Operating revenues in Foster Wheeler Scope were $401.7 million in the first quarter of 2008, an increase of 14% compared with the average quarter of 2007. New orders booked in Foster Wheeler Scope were $533.3 million in the first quarter of 2008, an increase of 7% compared with the average quarter of 2007. Backlog in Foster Wheeler Scope was a record $1.8 billion at the end of the first quarter of 2008, an increase of 55% compared with scope backlog at the end of the year-ago quarter. Milchovich noted, �Our businesses witnessed very strong market demand during the quarter, and we expect both groups to have a very good year. In our E&C business, the market segments we serve continue to be very robust. Demand in the refining and petrochemical sectors is very strong. And in the LNG market, where demand continues to grow strongly and where we have a strong presence, we signed pre-FEED contracts in the first quarter for two significant planned LNG liquefaction investments. Our Global Power Group had a terrific quarter and, overall, the markets we serve remain strong. However, of late we have noticed a change in the tone of the solid-fuel boiler market, primarily in North America. We are beginning to see instances of delays in certain projects that we view as prospects. Environmental considerations have imposed restraints on clients regarding the progress of some projects. In addition, and to varying degrees, clients have expressed concerns regarding cost inflation and slower economic growth in the North American market.� 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 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; 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. Calculation of EBITDA Margin Segment EBITDA margin is calculated by dividing business unit operating revenues in Foster Wheeler Scope into business unit EBITDA. 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 the company 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, Wednesday, May 7, at 11:00 a.m. (Eastern) to discuss its financial results for the first quarter of 2008. 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. 40820119#) 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 40820119# required) starting one hour after the conclusion of the call through 8:00 p.m. (Eastern) on Friday, June 6, 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 claims 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 Condensed Consolidated Statement of Operations (in thousands of dollars, except share data and per share amounts) (unaudited) � � Three months ended � March 28, 2008 March 30, 2007 � Backlog $ 8,951,400 $ 5,706,500 New orders booked � 1,243,700 � 1,416,500 � Operating revenues $ 1,795,724 $ 1,152,122 Cost of operating revenues � (1,578,753) � (944,610) Contract profit 216,971 207,512 � Selling, general & administrative expenses (64,896) (55,088) Other income 19,534 5,764 Other deductions (11,891) (8,172) Interest income 10,531 5,752 Interest expense (6,151) (4,725) Minority interest in income of consolidated affiliates (473) (2,309) Net asbestos-related gain 14,188 - � � Income before income taxes 177,813 148,734 Provision for income taxes � (39,750) � (33,909) Net income $ 138,063 $ 114,825 � � Shares Outstanding: Weighted-average number of common shares outstanding for basic earnings per common share 143,917,790 139,507,752 � Weighted-average number of common shares outstanding for diluted earnings per common share 145,298,514 143,531,056 � � � � Earnings per common share: Basic $ 0.96 $ 0.82 Diluted $ 0.95 $ 0.80 Foster Wheeler Ltd. and Subsidiaries Condensed Consolidated Balance Sheet (in thousands of dollars) (unaudited) � March 28, � December 28, 2008 2007 ASSETS Current Assets: Cash and cash equivalents $ 1,160,191 $ 1,048,544 Accounts and notes receivable, net: Trade 575,171 580,883 Other 134,113 98,708 Contracts in process 239,918 239,737 Prepaid, deferred and refundable income taxes 39,162 36,532 Other current assets � 44,798 � 39,979 Total current assets � 2,193,353 � 2,044,383 � Land, buildings and equipment, net 349,903 337,485 Restricted cash 36,183 20,937 Notes and accounts receivable � long-term 2,564 2,941 Investments in and advances to unconsolidated affiliates 220,748 198,346 Goodwill, net 62,672 53,345 Other intangible assets, net 64,869 61,190 Asbestos-related insurance recovery receivable 307,053 324,588 Other assets 94,781 93,737 Deferred income taxes � 110,946 � 112,036 TOTAL ASSETS $ 3,443,072 $ 3,248,988 � LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS� EQUITY Current Liabilities: Current installments on long-term debt $ 19,520 $ 19,368 Accounts payable 327,591 372,531 Accrued expenses 308,153 331,814 Billings in excess of costs and estimated earnings on uncompleted contracts 835,542 744,236 Income taxes payable � 79,655 � 55,824 Total current liabilities � 1,570,461 � 1,523,773 � Long-term debt 193,386 185,978 Deferred income taxes 81,998 81,008 Pension, postretirement and other employee benefits 285,915 290,741 Asbestos-related liability 359,429 376,803 Other long-term liabilities and minority interest 213,303 216,916 Commitments and contingencies � � TOTAL LIABILITIES � 2,704,492 � 2,675,219 � Temporary Equity: Non-vested restricted awards subject to redemption � 2,425 � 2,728 TOTAL TEMPORARY EQUITY � 2,425 � 2,728 � Shareholders' Equity: Preferred shares - - Common shares 1,441 1,439 Paid-in capital 1,389,952 1,385,311 Accumulated deficit (416,532) (554,595) Accumulated other comprehensive loss � (238,706) � (261,114) TOTAL SHAREHOLDERS� EQUITY � 736,155 � 571,041 TOTAL LIABILITIES, TEMPORARY EQUITY � � AND SHAREHOLDERS� EQUITY $ 3,443,072 $ 3,248,988 Foster Wheeler Ltd. and Subsidiaries Business Segments (in thousands of dollars) (unaudited) � � Three months ended March 28, 2008 March 30, 2007 Global Engineering & Construction Group Backlog - in future revenues $ 7,177,900 $ 4,554,700 New orders booked - in future revenues 707,300 872,700 Operating revenues 1,391,001 824,169 EBITDA 134,460 141,133 � Foster Wheeler Scope (1): Backlog - in Foster Wheeler Scope 1,803,600 1,601,500 New orders booked - in Foster Wheeler Scope 612,500 533,300 Operating revenues - in Foster Wheeler Scope 547,208 529,631 � Global Power Group Backlog - in future revenues 1,773,500 1,151,800 New orders booked - in future revenues 536,400 543,800 Operating revenues 404,723 327,953 EBITDA 64,416 37,024 � Foster Wheeler Scope (1): Backlog - in Foster Wheeler Scope 1,760,600 1,138,500 New orders booked - in Foster Wheeler Scope 533,300 540,700 Operating revenues - in Foster Wheeler Scope 401,663 324,822 � Corporate & Finance Group (2) EBITDA (3,556) (15,860) � Consolidated Backlog - in future revenues 8,951,400 5,706,500 New orders booked - in future revenues 1,243,700 1,416,500 Operating revenues 1,795,724 1,152,122 EBITDA 195,320 162,297 � Foster Wheeler Scope (1): Backlog - in Foster Wheeler Scope 3,564,200 2,740,000 New orders booked - in Foster Wheeler Scope 1,145,800 1,074,000 Operating revenues - in Foster Wheeler Scope 948,871 854,453 (1) Foster Wheeler Scope represents that portion of backlog, new orders booked and operating revenues on which profit can be earned. Foster Wheeler Scope excludes revenues relating to third-party costs incurred by the company 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 March 28, 2008 March 30, 2007 December 28, 2007 Reconciliation of EBITDA to Net Income EBITDA: Global Engineering & Construction Group $ 134,460 $ 141,133 $ 505,647 Global Power Group 64,416 37,024 139,177 Corporate & Finance Group � (3,556) � (15,860) � (52,984) Consolidated EBITDA 195,320 162,297 591,840 Less: Interest expense (6,151) (4,725) (19,855) Less: Depreciation/amortization (1) � (11,356) � (8,838) � (41,691) Income before income taxes 177,813 148,734 530,294 Provision for income taxes � (39,750) � (33,909) � (136,420) Net income $ 138,063 $ 114,825 $ 393,874 � Reconciliation of Foster Wheeler Scope Operating Revenues to Operating Revenues � Global Engineering & Construction Group � Operating revenues - in Foster Wheeler Scope $ 547,208 $ 529,631 $ 2,144,199 Flow-through revenues � 843,793 � 294,538 � 1,537,060 Operating revenues � 1,391,001 � 824,169 � 3,681,259 � Global Power Group � Operating revenues - in Foster Wheeler Scope 401,663 324,822 1,413,462 Flow-through revenues � 3,060 � 3,131 � 12,522 Operating revenues � 404,723 � 327,953 � 1,425,984 � Consolidated � Operating revenues - in Foster Wheeler Scope 948,871 854,453 3,557,661 Flow-through revenues � 846,853 � 297,669 � 1,549,582 Operating revenues $ 1,795,724 $ 1,152,122 $ 5,107,243 � (1)The depreciation / amortization by business segment: Three months ended Twelve months ended March 28, 2008 March 30, 2007 December 28, 2007 Global Engineering & Construction Group $ (5,635) $ (3,478) $ (17,485) Global Power Group (5,378) (5,019) (22,835) Corporate & Finance Group � (343) � (341) � (1,371) Total depreciation / amortization $ (11,356) $ (8,838) $ (41,691) Foster Wheeler Ltd. and Subsidiaries EBITDA and Diluted Earnings Per Common Share Reconciliation (in thousands of dollars, except per share amounts) (unaudited) � � � Three Months Ended March 28, 2008 � Diluted Earnings EBITDA � Net Income Per Common Share As adjusted $ 181,132 $ 123,875 $ 0.85 � Add back: Net asbestos-related gain 14,188 14,188 0.10 � � � � As reported $ 195,320 � $ 138,063 $ 0.95 � � Twelve Months Ended December 28, 2007 � Diluted Earnings EBITDA � Net Income Per Common Share As adjusted $ 585,695 $ 387,729 $ 2.68 � Add back: Net asbestos-related gain 6,145 6,145 0.04 � � � � As reported $ 591,840 � $ 393,874 $ 2.72 Foster Wheeler Ltd. and Subsidiaries Average Quarter of 2007 Calculation (in thousands of dollars) (unaudited) � � 2007 Full Year Amount � 2007 Quarterly Average Amount * � Consolidated Net income $ 393,874 $ 98,469 Net income, as adjusted 387,729 96,932 Consolidated EBITDA 591,840 147,960 Consolidated EBITDA, as adjusted 585,695 146,424 � � Global Engineering & Construction Group New orders booked - in Foster Wheeler Scope $ 2,150,800 $ 537,700 Operating revenues - in Foster Wheeler Scope 2,144,199 536,050 Segment EBITDA 505,647 126,412 EBITDA margin 23.6% 23.6% � � Global Power Group New orders booked - in Foster Wheeler Scope $ 1,996,000 $ 499,000 Operating revenues - in Foster Wheeler Scope 1,413,462 353,366 Segment EBITDA 139,177 34,794 EBITDA margin 9.8% 9.8% * To calculate the quarterly average dollar amounts, the company divided reported annual figures by four.