Foster Wheeler Ends 4Q 2009 with $1B Cash Position



Foster Wheeler reported net income for the fourth quarter of 2009 of $65.1 million, or $0.51 per diluted share, compared with $99.9 million, or $0.75 per diluted share, in the fourth quarter of 2008. Net income in both quarterly periods was impacted by asbestos-related items as detailed in the attached table. Excluding such items from both quarterly periods, net income in the fourth quarter of 2009 was $86.2 million, or $0.67 per diluted share, compared with $137.2 million, or $1.03 per diluted share, in the fourth quarter of 2008. The non-cash asbestos provision in the fourth quarter of 2009 reflected an increased estimate of costs for the period 2010 through 2024, primarily related to defense costs. Fourth-quarter 2009 consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was $108.1 million, compared with $105.1 million in the fourth quarter of 2008. Consolidated EBITDA in both quarterly periods was also impacted by asbestos-related items. Excluding such items from both quarterly periods, consolidated EBITDA in the fourth quarter of 2009 was $129.2 million, compared with $142.4 million in the fourth quarter of 2008. For the full year 2009, net income was $350.2 million, or $2.75 per diluted share, compared with $526.6 million, or $3.68 per diluted share, in 2008. For the full year 2009, consolidated EBITDA was $503.8 million, compared with $686.1 million in 2008. Net income and consolidated EBITDA in 2009 and 2008 were impacted by asbestos-related items as detailed in the attached table. Excluding such items from both periods, net income in 2009 was $376.5 million, or $2.96 per diluted share, compared with $533.2 million, or $3.73 per diluted share, in 2008; and consolidated EBITDA in 2009 was $530.2 million, compared with $692.7 million in 2008.

In commenting on the operating performance of the company's two business groups in the fourth quarter of 2009, Foster Wheeler's Chairman and Chief Executive Officer Raymond J. Milchovich said, "Even though EBITDA for each of the two groups was below the record-high average quarter of 2008, the operating and commercial performance of both E&C and GPG continued to be excellent. Furthermore, each group continued to do a very good job of capturing available market opportunities. In addition, the company's cash position continued its sequential-quarter build, reaching $1 billion at the end of the fourth quarter of 2009."

Milchovich added, "For much of 2009, we publicly stated that our financial results were subject to the impact of non-operating items relative to 2008. We clearly witnessed those unfavorable impacts on our pre-tax income for the full year and the fourth quarter of 2009."

The impact of such non-operating items on the company's pretax income in 2009 as compared with 2008 amounted to approximately $102.0 million, consisting of an unfavorable currency translation of approximately $48 million, a $34.2 million reduction in interest income and a $19.3 million increase in pension expense.

The impact of such non-operating items on the company's pretax income in the fourth quarter of 2009 as compared with the average quarter of 2008, was approximately $18 million, consisting of an $8.4 million reduction in interest income, an unfavorable currency translation impact of approximately $5 million, and a $4.6 million increase in pension expense.

In addition, pre-tax income in the fourth quarter of 2009 was impacted by a charge of $9.8 million for severance costs, $6.1 million of which is associated with right-sizing the company's Global Engineering and Construction Group during the first half of 2010. Further, a higher effective tax rate in the fourth quarter of 2009 versus the effective tax rate for the average quarter of 2008 reduced net income by approximately $12 million.
 


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