Exhibit 99.4
FOSTER WHEELER REDUCES GOODWILL AT E&C UNIT AND RECORDS
CUMULATIVE EFFECT IN SECOND-QUARTER 10-Q
HAMILTON, BERMUDA, August 16, 2002--Foster Wheeler Ltd. (NYSE:FWC)
announced that it recently finalized its valuation of goodwill impairment for
one of its Engineering and Construction units under the two-step evaluation
provisions of SFAS No. 142. Accordingly, the Company has recorded an additional
goodwill impairment charge of $48.7 million in the second quarter. This charge
has been accounted for as the cumulative effect of a change in accounting
principle under the transition rules of SFAS No. 142. The additional impairment
charge includes a $24.0 million charge related to the same reporting unit
previously included as an asset impairment in the Company's second-quarter
earnings release, dated July 31, 2002. The Company is reporting the charge at
this time because it finalized its evaluation of the goodwill impairment
subsequent to the release of its second-quarter earnings, but prior to the
filing of its second-quarter 10-Q.
The net losses after the cumulative effect of a change in accounting
principle for goodwill impairment for the three and six month periods ended June
28, 2002 were changed to $85.0 million and $183.1 million, respectively, in the
second-quarter financial statements. This compares to the previously reported
losses of $109.0 and $158.4 million, respectively.
In addition, as a result of performing the step one assessment under SFAS
No. 142 management has determined that a substantial portion of the goodwill at
an additional reporting unit in its Energy Group may be impaired. The Company
anticipates finalizing the necessary step two evaluation procedures required
under SFAS No. 142 in the third quarter. The amount of goodwill related to this
reporting unit amounts to approximately $77.0 million.
# # #
Notes to Editor:
1. Consolidated Statements follow.
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2. 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 our World Wide Web site at www.fwc.com.
3. Safe Harbor Statement
This news release contains forward-looking statements that are based on
management's assumptions, expectations and projections about the various
industries within which the Corporation operates. Such forward-looking
statements by their nature involve a degree of risk and uncertainty. The
corporation 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, changes in regulatory environment, changes in
project schedules, changes in trade, monetary and fiscal policies
worldwide, currency fluctuations, outcomes of pending and future
litigation, protection and validity of patents and other intellectual
property rights, and increasing competition by foreign and domestic
companies.
# # #
08-16-02
MEDIA CONTACT: Sherry Peske 908-730-4444
SHAREHOLDER CONTACT: John Doyle 908-730-4270
OTHER INQUIRIES: 908-730-4000
FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME
(In Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
June 28, 2002 June 29, 2001 June 28, 2002 June 29, 2001
------------- ------------- ------------- -------------
Revenues:
Operating revenues ........................................... $ 944,334 $ 826,882 $ 1,739,743 $ 1,509,525
Other income ................................................. 14,567 13,301 25,187 28,893
----------- ----------- ----------- -----------
Total revenues ............................................... 958,901 840,183 1,764,930 1,538,418
----------- ----------- ----------- -----------
Costs and expenses:
Cost of operating revenues ................................... 895,547 742,461 1,607,479 1,350,146
Selling, general and administrative expenses ................. 57,086 59,644 110,724 111,041
Other deductions/minority interest ........................... 67,392 13,135 105,641 21,016
Interest expense ............................................. 15,053 15,434 31,957 32,262
Dividends on preferred security of subsidiary trust .......... 4,104 3,938 8,116 7,875
----------- ----------- ----------- -----------
Total costs and expenses ..................................... 1,039,182 834,612 1,863,917 1,522,340
----------- ----------- ----------- -----------
(Loss)/earnings before income taxes .............................. (80,281) 5,571 (98,987) 16,078
Provision for income taxes ....................................... 4,695 4,782 10,579 7,184
----------- ----------- ----------- -----------
Net (loss)/earnings prior to cumulative effect of a
change in accounting principle ................................. (84,976) 789 (109,566) 8,894
Cumulative effect on prior years (to December 28,
2001) of a change in accounting principle for goodwill,
net of $0 tax .................................................. -- -- (73,500) --
----------- ----------- ----------- -----------
Net (loss)/earnings .............................................. $ (84,976) 789 $(183,066) 8,894
(Loss)/earnings per share:
Basic:
Net (loss)/earnings prior to cumulative effect of
a change in accounting principle ........................ $ (2.08) $ 0.02 $ (2.68) $ 0.22
Cumulative effect on prior years (to December 28,
2001) of a change in accounting principle for
goodwill ................................................ -- -- (1.79) --
----------- ----------- ----------- -----------
Net (loss)/earnings ....................................... $ (2.08) $ 0.02 $ (4.47) $ 0.22
=========== =========== =========== ===========
Diluted:
Net (loss)/earnings prior to cumulative effect of
a change in accounting principle ........................ $ (2.08) $ 0.02 $ (2.68) $ 0.22
Cumulative effect on prior years (to December 28,
2001) of a change in accounting principle for
goodwill ................................................ -- -- (1.79) --
----------- ----------- ----------- -----------
Net (loss)/earnings ....................................... $ (2.08) $ 0.02 $ (4.47) $ 0.22
=========== =========== =========== ===========
Shares outstanding (in thousands):
Basic: weighted average number of shares outstanding .......... 40,945 40,891 40,932 40,863
Diluted: effect of share options .............................. -- 360 -- 335
----------- ----------- ----------- -----------
Total diluted ................................................ 40,945 41,251 40,932 41,198
=========== =========== =========== ===========
Cash dividends paid per common share ............................. $ -- $ 0.06 $ -- $ 0.12
=========== =========== =========== ===========
Foster Wheeler Ltd. and Subsidiaries
Major Business Groups
(In Millions of Dollars)
Three Months Ended Six Months Ended
June 28,2002 June 29, 2001 June 28, 2002 June 29,2001
------------ ------------- ------------- ------------
(Reclassified) (Reclassified)
Engineering & Construction (E&C)(6)
Revenues $ 560,167 $ 464,134 $ 981,302 $ 894,504
Gross earnings from operations 6,015 45,226 46,234 85,111
Interest expense (251) 907 (569) 940
(Loss)/earnings before income taxes and
cumulative effect of a change in
accounting principle for goodwill (1)(2) (13,237) 17,223 7,265 36,435
Energy
Revenues $ 411,916 $ 385,005 $ 799,336 $ 666,822
Gross earnings from operations 43,955 38,696 87,265 73,528
Interest expense 4,357 6,263 11,738 12,554
(Loss)/earnings before income taxes and
cumulative effect of a change in accounting
principle for goodwill(1)(2)(3) (18,197) 11,120 (19,971) 20,461
Corporate and Financial Services (C&F) (5)
Revenues $ (13,182) $ (8,956) $ (15,708) $ (22,908)
Gross earnings from operations (1,182) 498 (1,235) 740
Interest expense (4) 15,051 12,202 28,904 26,643
Loss before income taxes and cumulative
effect of a change in accounting
principle for goodwill (48,847) (22,772) (86,281) (40,818)
Total
Revenues $ 958,901 $ 840,183 $ 1,764,930 $ 1,538,418
Gross earnings from operations 48,788 84,420 132,264 159,379
Interest expense (4) 19,157 19,372 40,073 40,137
(Loss)/earnings before income taxes
and accounting change (80,281) 5,571 (98,987) 16,078
Provision (benefit) for income taxes 4,695 4,782 10,579 7,184
Net (loss)/earnings prior to
cumulative effect of a change in
accounting principle (84,976) 789 (109,566) 8,894
Cumulative effect on prior years of a
change in accounting principle for
goodwill(7) -- -- (73,500) --
----------- ----------- ----------- -----------
Net (loss)/earnings $ (84,976) $ 789 $ (183,066) $ 8,894
=========== =========== =========== ===========
(1) Includes in the three and six months ended 2002, claim write-downs for E&C ($27,200) and for Energy ($20,700).
(2) Includes in the three and six months ended 2002, anticipated loss on sale of assets for Energy ($31,800 and $50,800).
(3) Includes in the three and six months ended 2001, $5,000 loss on sale of a hydrogen plant.
(4) Includes dividends on preferred security of subsidiary trust.
(5) Includes intersegment eliminations.
(6) Reflects the reclassification of the Engineering, Procurement and Construction ("EPC") business in the United States from the
E&C business group to the Energy business group to conform to 2002 presentation. For the three and six months ended June 29,
2001, revenues of $71,605 and $114,787, respectively, gross earnings from operations of $4,526 and $5,763, respectively,
interest expense of $257 and $474, respectively and earnings before income taxes of $3,091 and $2,679, respectively were
reclassified from the E&C group to the Energy group.
(7) Includes a provision for goodwill impairment of $48,700 for E&C and $24,800 for the Energy Group.
Operating revenues by industry segment for the periods ending June 28,
2002 and June 28,2001 were as follows:
Three Months Ended Six Months Ended
------------------ ----------------
June 28, 2002 June 29, 2001 June 28, 2002 June 29, 2001
------------- ------------- ------------- -------------
Power $ 45,847 $ 83,587 $ 53,805 $ 165,968
Oil and gas/refinery 247,081 187,715 405,168 365,232
Pharmaceutical 105,807 121,079 181,152 192,096
Chemical 37,935 59,031 76,571 106,050
Environmental 88,856 90,760 173,624 168,135
Power production 306,310 300,363 612,309 507,910
Other 112,498 (15,653) 237,114 4,134
------------- -------------- ------------- --------------
Total Operating Revenues $ 944,334 $ 826,882 $ 1,739,743 $ 1,509,525
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