FORM 8-K EXHIBIT 99
Exhibit 99 Text of registrant's press release dated April 30, 2000, as
corrected May 1, 2000 -
For Immediate Release Contact: Michael Freitag or Wendi Kopsick
Kekst and Company
(212) 521-4800
FOR IMMEDIATE RELEASE
STONE & WEBSTER REPORTS FIRST QUARTER 2000 RESULTS
AND OTHER CORPORATE DEVELOPMENTS
Substantive Discussions Underway Regarding Possible Strategic Transactions,
Including the Sale of All or Part of Its Engineering and Construction Assets;
Company Will Include Provision for Cost Overruns In Revised 1999 Financials
BOSTON, Massachusetts, April 30, 2000 - Stone & Webster, Incorporated (NYSE: SW)
today reported financial results for the first quarter ended March 31, 2000 and
said it will revise its 1999 financial results to include a provision for a
substantial cost overrun on an ongoing project. The Company also announced that
it is currently engaged in substantive discussions regarding possible strategic
transactions, including the sale of all or part of its engineering and
construction business.
For the quarter ended March 31, 2000, Stone & Webster reported net income of
$7.2 million or $0.51 per share, compared with a net loss of $58.7 million or
$4.50 per share for the same period last year. Operating income was $10.8
million compared with an operating loss of $69.4 million, respectively, for the
quarters ended March 31, 2000 and 1999. The first quarter 2000 results include
operating income of $12.9 million from a settlement reached on an international
project. The 1999 first quarter results reflected provisions of $74.0 million to
cover completion costs for two international projects, one of which was the
project for which a settlement was reached in the current quarter.
Engineering, Construction and Consulting revenue was $414.3 million, a 63
percent increase from the first quarter 1999 reported revenue of $254.7 million.
New orders were $188.0 million compared with $148.8 million for the first
quarter of 1999. Backlog was $2.4 billion compared with $2.6 billion at December
31, 1999.
Nordic Refrigerated Services, classified as a discontinued operation for
financial reporting purposes, reported revenue of $10.7 million for the current
quarter compared to $11.4 million for the quarter ended March 31, 1999.
Operating income was $1.7 million for the current quarter compared to $2.0
million for the quarter ended March 31, 1999. The Company is continuing to
pursue the sale of Nordic as planned.
Company officials were recently notified of an unanticipated cost overrun on a
key project by a major subcontractor related to estimates to complete work
during the first half of the current year. As a result, the Company conducted a
thorough review of this project and, based on this review, the Company will
record a provision of $27.5 million ($19.3 million after-tax or $1.47 per share)
and will revise its 1999 financial statements and amend its 1999 Form 10-K.
As a result of the unanticipated overrun, coupled with previously reported
operating losses, the Company is experiencing liquidity problems and is in
substantive discussions with potential lenders and strategic partners to provide
interim and long-term financing. The Company has also initiated discussions with
certain subcontractors with regard to extended terms of payment. However, there
are no assurances that these discussions will result in any ultimate agreement.
If these efforts prove unsuccessful, the Company's independent public
accountants have indicated that the Company's ability to continue as a going
concern will be brought into question and, upon issuance of the amended 1999
Form 10-K, the independent public accountants will modify their report
previously issued on April 14, 2000.
The issuance of a modified opinion by the Company's independent public
accountants would be an event of default under the Company's credit agreement
with its principal bank lenders. Based on discussions with the agent bank for
such lenders, the Company expects to enter into a forbearance agreement with
such lenders if and when such event of default occurs.
"In view of strategic developments in the Company's principal markets and the
consolidation trends in our industry and our clients' end markets, the Board of
Directors had retained Lazard Freres and Goldman Sachs to assist in exploring
strategic alternatives," said H. Kerner Smith, Stone & Webster's Chairman,
President and Chief Executive Officer. "The Board has accelerated these efforts
and the Company is in substantive discussions regarding possible strategic
transactions, including the sale of all or part of its engineering and
construction business."
Stone & Webster is a global leader in engineering, construction and consulting
services for power, process/industrial and environmental/infrastructure markets.
# # #
Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of the Company. Any of the
statements or comments made in this release that refer to the Company's
estimated or future results are forward looking and reflect the Company's
current analysis of existing trends and information. The Company cautions that a
variety of factors, including but not limited to the following, could cause
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
energy, power and environmental industries, the uncertain timing of awards and
contracts, changes in regulatory environments, changes in project schedules,
changes in trade, monetary and fiscal policies world-wide, currency
fluctuations, outcomes of pending and future litigation, protection and validity
of patents and other intellectual property rights, increasing competition by
foreign and domestic companies and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission. The Company
undertakes no obligation to publicly release any revisions to the
forward-looking statements or reflect events or circumstances after the date of
this document.
- TABLES FOLLOW -
STONE & WEBSTER, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
2000 1999
---- ----
Revenue $414,337 $254,656
Cost of revenue 387,013 307,283
-------- --------
Gross profit (loss) 27,324 (52,627)
General and administrative expenses 16,550 16,726
-------- --------
Operating income (loss) 10,774 (69,353)
Other income (expense):
Interest income 674 661
Interest expense (1,086) (1,958)
-------- --------
Total other income (expense) (412) (1,297)
Income (loss) from continuing operations before
provision for taxes 10,362 (70,650)
Income tax provision (benefit) 4,232 (10,000)
-------- --------
Income (loss) from continuing operations (a) 6,130 (60,650)
Discontinued operation:
Income from discontinued operations 1,708 1,956
Income tax provision (benefit) 598 -
-------- --------
Income from discontinued operation, net of tax 1,110 1,956
-------- --------
Net income (loss) (a) $ 7,240 $(58,694)
======== ========
Basic and diluted earnings per share:
Continuing operations (a) $0.43 $(4.65)
Discontinued operation 0.08 0.15
----- ------
Earnings per share $0.51 $(4.50)
===== ======
Weighted-average number of shares outstanding:
Basic and diluted 14,219 13,053
====== ======
(a) Includes pension related items, which reduced operating costs by $5,288 for
the three months ended March 31, 2000 compared to $3,302 for the same
period in the prior year. These items increased net income by $3,173 or
$0.22 per share for the three months ended March 31, 2000 and by $1,981, or
$0.15 per share for the same period in the prior year. Pension related
items include a net pension credit for the Company's domestic subsidiaries
and a net pension cost for its foreign subsidiaries. STONE & WEBSTER,
INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
STONE & WEBSTER, INCORPORATED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
Revised
March 31, December 31,
2000 1999
---- ----
Assets
Current assets:
Cash and cash equivalents $ 36,911 $106,481
Accounts receivable, principally trade 280,183 288,824
Costs and revenues recognized in excess of
billings 121,043 98,663
Deferred income taxes 38,540 41,286
Other 829 404
-------- --------
Total current assets 477,506 535,658
Assets held for sale 6,744 6,744
Fixed assets, net 84,967 73,837
Domestic prepaid pension cost 162,867 157,089
Net assets of discontinued operations 111,681 112,110
Prepaid expenses 12,378 11,719
Other assets 32,558 36,139
-------- --------
Total assets $888,701 $933,296
Liabilities and Shareholders' Equity
Current liabilities:
Bank loans $ 24,359 $ 22,793
Current portion of long-term debt 2,328 2,344
Accounts payable 136,371 161,218
Billings in excess of cost and revenues
recognized 244,532 275,461
Accrued liabilities 58,066 76,612
Accrued taxes 28,739 17,371
-------- --------
Total current liabilities 494,395 555,799
Long-term debt 19,035 19,950
Deferred income taxes 41,520 41,286
Other liabilities 13,070 11,216
Shareholders' equity 320,681 305,045
-------- --------
Total liabilities and shareholders' equity $888,701 $933,296
======== ========