-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Kcl+QxUkEJ/nIj4rJt/CCZS9kT4SYdDZrcLflFnrjqDSnqPsT0aaXJEL/Cs+VLgg u/jtAt+Xu83jNlOeLzR9pg== 0000950123-94-001338.txt : 19940822 0000950123-94-001338.hdr.sgml : 19940822 ACCESSION NUMBER: 0000950123-94-001338 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940701 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOSTER WHEELER CORP CENTRAL INDEX KEY: 0000038321 STANDARD INDUSTRIAL CLASSIFICATION: 1600 IRS NUMBER: 131855904 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00286 FILM NUMBER: 94543783 BUSINESS ADDRESS: STREET 1: PERRYVILLE CORPORATE PARK CITY: CLINTON STATE: NJ ZIP: 08809 BUSINESS PHONE: 9087304090 10-Q 1 FOSTER WHEELER CORP. FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ----------------------- /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended July 1, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______ to _______ Commission File Number 1-286-2 FOSTER WHEELER CORPORATION ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) New York 13-1855904 ----------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
Perryville Corporate Park, Clinton, N. J. 08809-4000 ----------------------------------------- --------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 730-4000 -------------------- (Not Applicable) -------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 1, 1994 was 35,803,435 shares. 2 FOSTER WHEELER CORPORATION INDEX
Page No. -------- Part I Financial Information: Item 1 - Financial Statements: Condensed Consolidated Balance Sheet at July 1, 1994 and December 31, 1993 2 Condensed Consolidated Statement of Earnings Three and Six Months Ended July 1, 1994 and June 25, 1993 3 Condensed Consolidated Statement of Cash Flows Six Months Ended July 1, 1994 and June 25, 1993 4 Notes to Condensed Consolidated Financial Statements 5 - 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 Part II Other Information: Item 2 - Changes in Securities 10 Item 4 - Submission of Matters to a Vote of Security Holders 10 Item 5 - Other Information 10 Item 6 - Exhibits and Reports on Form 8-K 10
- 1 - 3 PART I. FINANCIAL INFORMATION FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 1. - FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF DOLLARS)
July 1, 1994 December 31, ASSETS (Unaudited) 1993 - - ------ ------------- ------------ Current Assets: Cash and cash equivalents $ 270,261 $ 249,514 Short-term investments 135,412 127,876 Accounts and notes receivable 459,492 442,499 Contracts in process 145,797 87,076 Inventories 27,602 24,500 Prepaid and refundable income taxes 43,774 39,000 Prepaid expenses 11,932 12,989 ---------- ---------- Total Current Assets 1,094,270 983,454 Notes and accounts receivable - long-term 49,586 40,560 Investments and advances 41,836 34,758 Land, buildings and equipment - at cost less accumulated depreciation: 1994 - $228,784; 1993 - $217,332 563,022 567,216 Cost in excess of net assets of subsidiaries acquired 4,026 4,098 Deferred charges and prepaid pension cost 172,139 160,967 Deferred income taxes 5,841 15,148 ---------- ---------- Total Assets $1,930,720 $1,806,201 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY - - ------------------------------------ Current Liabilities: Current installments on long-term debt $ 30,691 $ 32,523 Bank loans 104,381 59,725 Accounts payable and accrued expenses 311,205 292,738 Estimated cost to complete long-term contracts 272,948 287,508 Advance payments by customers 111,016 76,462 Income taxes 31,442 30,033 ---------- ---------- Total Current Liabilities 861,683 778,989 Long-term debt, less current installments 399,096 396,741 Other long-term liabilities, deferred credits, postretirement benefits other than pensions and minority interest in subsidiary companies 213,086 211,604 Deferred income taxes 20,205 18,691 ---------- ---------- Total Liabilities 1,494,070 1,406,025 ---------- ---------- Stockholders' Equity: Common stock 35,824 35,707 Paid-in capital 38,014 35,076 Retained earnings 400,756 381,205 Accumulated translation adjustment (37,393) (51,261) ---------- ---------- 437,201 400,727 Less cost of treasury stock 551 551 ---------- ---------- Total Stockholders' Equity 436,650 400,176 ---------- ---------- Total Liabilities and Stockholders' Equity $1,930,720 $1,806,201 ========== ==========
See notes to financial statements. - 2 - 4 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Six Months Ended ---------------------------- ----------------------------- July 1, 1994 June 25, 1993 July 1, 1994 June 25, 1993 ------------ ------------- ------------ ------------- Revenues: Operating revenues $ 571,247 $ 646,503 $ 1,040,892 $ 1,233,034 Other income 8,377 7,856 16,708 17,750 ----------- ----------- ----------- ----------- Total revenues 579,624 654,359 1,057,600 1,250,784 ----------- ----------- ----------- ----------- Cost and expenses: Cost of operating revenues 494,000 571,845 886,526 1,089,703 Selling, general and administrative expenses 49,411 49,108 99,142 98,494 Other deductions 9,554 9,725 18,445 19,361 Minority interest 1,034 666 2,057 1,319 ----------- ----------- ----------- ----------- Total costs and expenses 553,999 631,344 1,006,170 1,208,877 ----------- ----------- ----------- ----------- Earnings before income taxes 25,625 23,015 51,430 41,907 ----------- ----------- ----------- ----------- Provision for income taxes: Federal and foreign 7,921 7,598 17,162 13,068 State 1,045 862 2,206 1,554 ----------- ----------- ----------- ----------- 8,966 8,460 19,368 14,622 ----------- ----------- ----------- ----------- Net earnings $ 16,659 $ 14,555 $ 32,062 $ 27,285 =========== =========== =========== =========== Weighted average number of common shares outstanding 35,799,788 35,645,945 35,765,403 35,642,074 =========== =========== =========== =========== Earnings per share $ .47 $ .41 $ .90 $ .77 =========== =========== =========== =========== Cash dividends paid per common share $ .185 $ .165 $ .35 $ .315 =========== =========== =========== ===========
See notes to financial statements. - 3 - 5 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS OF DOLLARS) (UNAUDITED)
Six Months Ended ---------------------------------- July 1, 1994 June 25, 1993 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 32,062 $ 27,285 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization 21,069 21,876 Noncurrent deferred tax 11,019 8,505 Equity loss, net of dividends 47 107 Other (1,663) (671) Changes in assets and liabilities: Receivables (8,030) 52,751 Contracts in process and inventories (59,796) (34,615) Accounts payable and accrued expenses 11,209 (56,743) Estimated cost to complete long-term contracts (23,278) 62,556 Advance payments by customers 28,813 33,510 Income taxes (3,481) (15,159) Other assets and liabilities (12,878) (3,897) ---------- ---------- NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES (4,907) 95,505 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (18,038) (14,330) Changes in short-term investments 469 (37,407) Changes in investments and advances (4,883) (395) Partnership distribution (3,053) (3,235) Other 5,342 722 ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (20,163) (54,645) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to stockholders (12,511) (11,221) Proceeds from exercise of stock options 2,137 149 Proceeds from long-term debt 4,771 67 Repayment of long-term debt (4,095) (8,531) Changes in short-term debt 40,615 23,160 ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 30,917 3,624 ---------- ---------- Effect of exchange rate changes on cash and cash equivalents 14,900 (9,359) ---------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS 20,747 35,125 Cash and cash equivalents at beginning of year 249,514 146,485 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 270,261 $ 181,610 ========== ========== Cash paid during period: -Interest (net of amount capitalized) $ 17,518 $ 14,384 -Income taxes $ 7,563 $ 7,028
See notes to financial statements. - 4 - 6 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 1. The condensed consolidated balance sheet as of July 1, 1994, and the related condensed consolidated statements of earnings and cash flows for the three and six month periods ended July 1, 1994 and June 25, 1993 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments only consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Corporation's 1993 Annual Report, Form 10-K filed March 25, 1994 which should be read in conjunction with this report. 2. In the ordinary course of business the Corporation and its subsidiaries enter into contracts providing for assessment of damages for nonperformance or delays in completion. Suits and claims have been or may be brought against the Corporation by customers alleging deficiencies in either equipment design or plant construction. The Corporation and its subsidiaries also routinely become involved in litigation relating to patents and other intellectual property. There are several actions of that nature presently pending. If the presently pending suits described above were sustained in substantially the amounts asserted, they would have a material adverse effect on the Corporation's financial condition and results of operations. However, based on its knowledge of the facts and circumstances relating to the Corporation's liabilities, if any, and to its insurance coverage, management believes that the disposition of such suits will not result in charges against assets or earnings materially in excess of amounts provided in the accounts. The Corporation and its subsidiaries, along with many other companies, are codefendants in numerous lawsuits pending in the United States and Canada, in which plaintiffs claim damages for personal injury or property damage alleged to arise from exposure to or use of asbestos. At July 1, 1994 and June 25, 1993, the suits pending numbered approximately 42,800 and 30,900, respectively. It is anticipated that a substantial number of similar suits will be filed in the future. Since the inception of asbestos-related litigation against the Corporation and its subsidiaries, approximately 34,700 lawsuits have been terminated without any payment or with only nominal payments by the insurers for the Corporation and its subsidiaries. Based on its knowledge of relevant facts and circumstances, on its determination of the availability and extent of insurance coverage, and on the advice of the Corporation's special counsel, the management of the Corporation is of the opinion that the ultimate disposition of pending and future asbestos-related lawsuits will not result in material charges against assets or earnings. The asbestos litigation herein described does not relate to any activities currently being carried on by the Corporation or its subsidiaries. 3. The Corporation's unsecured debt contains the following restrictions: The Note Agreement pursuant to which the 8.58% notes were issued and the Revolving Credit Agreement require that consolidated Tangible Net Worth, as defined in the agreements, be at least $400,000 plus 25% of earnings from 1991 and thereafter. At July 1, 1994, the consolidated Tangible - 5 - 7 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) (Continued) Net Worth was $566,400. The Note Agreement and the Revolving Credit Agreement also require the maintenance of certain capitalization ratios. Both agreements require that the ratio of Indebtedness to Tangible Net Worth, as those terms are defined in the agreements, not exceed .65 to 1. At July 1, 1994 this ratio was .34 to 1. 4. A total of 1,095,140 shares were reserved for issuance under the stock option plans; of this total 539,578 were not under option. 5. Foster Wheeler Corporation had a backlog of firm orders as of July 1, 1994 of $4,264,214 as compared to a backlog as of June 25, 1993 of $3,834,681. 6. Earnings per share data have been computed on the weighted average number of shares of common stock outstanding. Outstanding stock options have been disregarded because their effect on earnings per share would not be significant. 7. Interest income and cost for the following periods are:
Three Months Ended Six Months Ended ------------------------------- ------------------------------ July 1, 1994 June 25, 1993 July 1, 1994 June 25, 1993 ------------ ------------- ------------ ------------- Interest income $5,925 $6,250 $12,104 $12,589 ====== ====== ======= ======= Interest cost $8,847 $8,633 $17,063 $16,994 ====== ====== ======= =======
Included in interest cost is interest capitalized on self-constructed assets which is insignificant for all periods noted. - 6 - 8 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) (Continued) 8. Changes in stockholders' equity for the six months ended July 1, 1994 were as follows:
Common Stock Accumulated Treasury Stock Total ----------------------- Paid-in Retained Translation ------------------ Stockholders' Shares Amount Capital Earnings Adjustment Shares Amount Equity ------ ------ ------- -------- ---------- ------ ------ ------ Balance December 31, 1993 35,706,982 $35,707 $35,076 $381,205 $(51,261) 20,129 $(551) $400,176 Net earnings 32,062 32,062 Dividends paid - common (12,511) (12,511) Sold under stock options 116,582 117 2,020 2,137 Tax benefits related to incentive plan and stock options 918 918 Current period translation adjustment 13,868 13,868 ---------- ------- ------- -------- -------- ------ ----- --------- Balance July 1, 1994 35,823,564 $35,824 $38,014 $400,756 $(37,393) 20,129 $(551) $ 436,650 ========== ======= ======= ======== ========= ====== ===== =========
- 7 - 9 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) The following is Management's Discussion and Analysis of certain significant factors which have affected the financial condition and results of operations of the Corporation for the periods indicated below. This discussion and analysis should be read in conjunction with the 1993 Annual Report, Form 10-K filed March 25, 1994. A. Consolidated results of operations for three and six months ended July 1, 1994 vs. three and six months ended June 25, 1993. The backlog of unfilled orders as of July 1, 1994 totaled $4.3 billion, the highest in the history of the Corporation. On a consolidated basis, this represented an 11% increase over the amount reported for June 1993. Unfilled orders of the Engineering and Construction Group increased by approximately 9% due principally to the orders taken by Foster Wheeler Italiana, S.p.A. and Foster Wheeler Limited-U.K. The Energy Equipment Group recorded a 22% increase in unfilled orders due primarily to the orders taken by Foster Wheeler Energy Corporation. New orders booked for the three and six months ended July 1, 1994 amounted to approximately $700 million and $1.5 billion, respectively. These amounts represented increases of 10% for the three month period and 16% for the six month period in comparison to 1993. These increases were primarily the result of significant bookings by two European Engineering and Construction subsidiaries and the bookings recorded by Foster Wheeler Energy Corporation. Operating revenues for the three and six months ended July 1, 1994 decreased approximately $75 million and $192 million in comparison to 1993. These decreases primarily resulted from two European affiliates of the Engineering and Construction Group reporting lower revenues related to flow-thru costs. For the first six months of 1994 other income decreased slightly, primarily due to the recognition of an exchange gain in 1993. Other deductions for the three and six month periods decreased slightly in comparison to 1993. Interest expense represented approximately 90% of total other deductions for both the three and six month periods ended July 1, 1994. In comparing both the three and six month periods, selling general and administrative expenses remained at approximately the same levels as reported in 1993. Net earnings increased by approximately $4.8 million (18%) for the six month period and by $2.1 million (14%) for the three month period. The year-to-date increase was primarily due to the increased earnings reported by the Energy Equipment Group. Foster Wheeler Energy Corporation and Foster Wheeler Energia, S.A. (in Spain) both reported increases in excess of 50% in comparison to 1993. For the quarter all operating groups reported earnings increases over the second quarter of 1993. The most significant increases were reported by Foster Wheeler Energia, S.A. and Foster Wheeler Italiana, S.p.A. - 8 - 10 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) B. Consolidated Financial Position Stockholder's equity for the six months ended July 1, 1994 increased $36,474,000. The increases from net earnings $32,062,000 and the change in the accumulative translation adjustment ($13,868,000) were partially offset by dividends to stockholders of $12,511,000. Since December 31, 1993, cash and cash equivalents have increased by $20,747,000. Cash generated from earnings of $62,534,000 reduced by an increase in funding of working capital resulted in a use of cash from operating activities of $4,907,000. Cash was used to pay dividends of $12,511,000 and long-term debt of $4,095,000. Existing cash balances, short term investments and unused credit facilities with banks remain adequate to support expected operating levels and anticipated future investing and financing activities. - 9 - 11 PART II. OTHER INFORMATION FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2. - CHANGES IN SECURITIES (b) Note 3 of the Notes to Condensed Consolidated Financial Statements which appears on Page 5 of Part I of this Report is incorporated herein by reference. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) Date of Meeting The Annual Meeting of Stockholders of Foster Wheeler Corporation was held on April 25, 1994 at the Parsippany-Hilton Hotel, 1 Hilton Court, Rt. 10 (West), Parsippany, New Jersey. (b) Election of Directors
Directors Elected For Withheld ----------------- --- -------- Martha J. Clark 28,481,737 139,837 John A. Hinds 28,490,720 130,854 David J. Roberts 28,491,078 130,496 John Timko, Jr. 28,320,514 301,060 Charles Y.C. Tse 28,480,993 140,581 Robert Van Buren 28,427,760 193,814
Other Directors continuing in office: Louis E. Azzato E. James Ferland Frank E. Perkins Leland E. Boren Harold. E. Kennedy Richard J. Swift Kenneth A. DeGhetto Joseph J. Melone
c) Matters Voted Upon Ratification of the appointment of Coopers & Lybrand as auditors of the Corporation for 1994: FOR 28,542,964 AGAINST 33,516 ABSTAIN 45,094
d) Terms of settlement between registrant and any other participant. Not applicable. ITEM 5. - OTHER INFORMATION Subsequent to the quarter's end, the Corporation announced that a Memorandum of Agreement had been signed with Enserch Corporation of Dallas, Texas, to purchase its subsidiary, Enserch Environmental Company, headquartered in Lyndhurst, N.J. The parties will enter a due diligence period of approximately two months with the closing expected in the fourth quarter of 1994. ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K b) Reports on Form 8-K None - 10 - 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. FOSTER WHEELER CORPORATION -------------------------- (Registrant) Date: August 10, 1994 /S/ David J. Roberts --------------- -------------------------- David J. Roberts (Vice Chairman and Chief Financial Officer) Date: August 10, 1994 /S/ Thomas R. O'Brien --------------- -------------------------- Thomas R. O'Brien (Vice President and General Counsel) - 11 - -----END PRIVACY-ENHANCED MESSAGE-----