May 2, 2002 — Foster Wheeler Ltd. reported a net loss for the first quarter of $24.6 million, or $0.60 per share, on $806.0 million in revenues.
The results were impacted by a loss of $19.0 million triggered by a preliminary agreement to sell a waste-to-energy facility in the U.S.
Also, the company incurred increased corporate expenses for professional services and waiver fees for the ongoing negotiations with the company’s bank lending group and for its intervention program consultants.
These results compare with net earnings of $8.1 million, or $0.20 per share, and revenues of $698.2 million in the first quarter of 2001. New orders booked were $792.8 million versus $950.5 million in the first quarter of last year, and backlog was $6.0 billion essentially unchanged from the level of $6.0 billion at the close of fiscal 2001.
At the close of the first quarter 2002, the company’s cash and cash equivalents position increased to $423.2 million compared to $224.0 million at the end of the fourth quarter of 2001. Also, net debt decreased 16 percent from the end of the fourth quarter to $681.5 million from $815.0 million at the end of fiscal 2001, the lowest level it has been in five years.
“Our performance during the first quarter was mixed,” said Raymond J. Milchovich, Foster Wheeler’s chairman, president and CEO. “The primary component of the loss for the first quarter is a write-down associated with the sale of one of our waste-to-energy plants. This action is part of an ongoing program to monetize non-core assets, reduce debt and strengthen our balance sheet and improve the company’s future ability to earn.
“We are also working diligently to complete negotiations with our various lenders, which were interrupted following the unexpected additional charges we had to take in the fourth quarter of 2001. Although I was very disappointed with the performance problems to these charges, they were isolated in one U.S. business unit and are not pervasive throughout our operations. In fact, operations in our U.K., Italian and Finnish units are very strong and are showing increasing growth. Therefore, I remain highly confident that we will obtain favorable credit agreements.
“In addition, our performance improvement initiatives are showing positive results. For example, we now measure our performance each week on several critical parameters of our top 22 projects for 2002. We then execute action plans to correct any problems or take advantage of opportunities on each project. We are installing a new operating system to tighten control of accounts receivable on our entire portfolio of active projects in North America. And, we now have more than 10,000 vendors worldwide linked to our e-procurement network, enabling us to leverage our buying power and significantly reduce our administrative costs.
“The excellent reputation Foster Wheeler enjoys in the marketplace, along with the huge performance improvement potential that we have identified, make me highly confident that we will rapidly work through our near-term issues and put the company on a much stronger financial footing,” he said.
Negotiations with Bank Lending Group Continues
Foster Wheeler’s management is continuing its discussions with the company’s lenders and various other financial institutions regarding a new long-term credit facility and a replacement for its lease financing and receivables sale arrangement. As a result, the company has obtained a further extension of its waiver under its revolving credit facility through May 30, 2002, subject to the satisfaction of certain conditions. Also, the company has requested extension of the forbearance of remedies for its lease financing facility through May 30, 2002. We expect to finalize the forbearance extension on May 1, 2002.
The company’s $50 million receivables sale arrangement was terminated by the lender on April 30, 2002. The company may elect to replace this facility if it can negotiate terms and conditions satisfactory to it from one or more of the financial institutions with which it is currently in discussions.
Engineering and Construction Group Results
Foster Wheeler’s domestic Engineering and Construction Group experienced delays in some project awards during the quarter.
New orders booked were $383.3 million, compared to $577.0 million in the first quarter of 2001, and backlog was $4.3 billion, down from $4.5 billion at year-end 2001. The Group reported revenues of $421.1 million, compared to $473.6 million in the first quarter of 2001. Earnings before taxes for the Group were $20.5 million compared to $18.8 million in the year-ago quarter.
Energy Group Results
In the first quarter, the Group saw the beginning of a softening in the power markets in the United States, although this was counteracted by an increase in biomass projects in Europe and the award of a large domestic power project.
The Group’s bookings increased to $414.0 million, compared to $378.9 million in the first quarter of 2001, and its backlog was up slightly to $1.7 billion from $1.5 billion for the 2001 year-end level. Revenues were $387.4 million, compared to $238.6 million for the same quarter of 2001. Earnings before taxes for the Group were $17.2 million compared to $9.7 million in the previous year’s first quarter, excluding the charge for the potential sale of the waste-to-energy facility.
Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, plant operation and environmental services. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit its World-Wide Web site at www.fwc.com.