HAMILTON, Bermuda, May 9, 2003 — Foster Wheeler Ltd. has reported a net loss for the first quarter of 2003 of $19.8 million, or $0.48 per share diluted, compared to a net loss of $176.1 million, or $4.30 per share diluted, for the same quarter last year.
Revenues for the first quarter of 2003 totaled $810.9 million compared to $806.0 million in the first quarter of last year. Higher revenues in the European engineering and construction and energy businesses more than offset slowdowns in the North American operating units and the reduced revenues resulting from selling substantially all of the assets of Foster Wheeler Environmental Corporation (FWENC) in early March.
“One of our key goals for 2003 is to generate operating EBITDA, which we expect to be approximately 30 percent higher than the average we achieved over the last three years, and the first-quarter operating results are on track. However, this quarter also included a significant level of planned restructuring spending,” said Raymond J. Milchovich, chairman, president and chief executive officer. “Our cash balance increased during the quarter, although we anticipate some level of future outflows due to the timing of cash flows for certain projects in our portfolio.”
The net loss for the first quarter included several items related to the company’s realignment of its operations. The company completed the sale of substantially all of the assets of FWENC and recognized a gain of $15.3 million and charges of $21.1 million for revisions to the estimates on environmental contracts that were retained. In addition, $18.4 million of planned pre-tax expenses were incurred this quarter for professional fees, severance and other expenses related to the company’s ongoing restructuring.
Cash balances worldwide at the end of the quarter were $473 million, compared to $429 million at year-end, and $423 million at the end of the first quarter of 2002. As of March 28, 2003, the company’s indebtedness was $1.1 billion, essentially unchanged from year-end 2002 and the end of the first quarter of 2002. On March 7, 2003, the company received approximately $80 million in net cash proceeds from the FWENC transaction. During the quarter, the company’s operations used $17 million of cash, primarily due to the anticipated outflows related to projects for which substantial advances had been received during 2002.
Bookings and Segment Performance
New orders booked during the first quarter of 2003 were $476.3 million compared to $792.8 million in the first quarter of last year. The company’s backlog was $3.5 billion, compared to $6.0 billion at the end of the first quarter of 2002. During the first quarter of 2003, $1.7 billion was removed from the backlog, representing the orders sold with the assets of the environmental business.
“The decrease in the company’s backlog is primarily due to soft market conditions and the FWENC sale,” added Milchovich. “However, current backlog is not directly comparable with backlog in prior periods, which included a number of problem projects and did not serve as an adequate measure of future profits. As a result of the contracting and project management initiatives that were put in place early last year, we are highly confident that the quality of our existing backlog will support our 2003 operating plan.”
First-quarter new bookings for the Engineering and Construction Group (E&C) were $262.8 million, compared to $383.3 million during the year-ago quarter. The decline was due to the absence of bookings from the company’s environmental assets sold during the quarter. The Group’s backlog was $2.2 billion, compared to $4.3 billion at quarter-end 2002. Backlog was reduced by $1.7 billion to account for the environmental asset sale.
Revenues for E&C grew from $421.1 million in last year’s first quarter, to $482.8 million in the first quarter of 2003, mainly due to increases in Continental Europe. Excluding costs of $8.6 million for the environmental transactions and restructuring items described above, earnings before interest, taxes, depreciation and amortization (EBITDA) were $20.7 million this quarter, compared to $24.6 million for the same period last year.
New bookings in the first quarter for the Energy Group declined to $210.1 million, compared to $414.0 million in the year-ago quarter, mainly due to weakness in the North American power market. Backlog at quarter-end was $1.3 billion, compared to $1.6 billion at quarter-end 2002. Energy Group revenues for the quarter were $326.4 million, compared to $387.4 million in the same quarter of 2002. EBITDA for the quarter was $30.5 million compared to EBITDA of $11.6 million last year, which included special charges of $24.7 million. Improved revenues and EBITDA in the company’s Finnish subsidiary were offset by weakness in the U.S. power operations.