-----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, EP1sxtcetlwDxHsQxBj4bfYI1KpTyy9PHrod7syxEnEIfqg30AsZm830MTaOq1R7 b6YVEBAQDhfWNrcLFE8i6w== 0000950123-94-001823.txt : 19941111 0000950123-94-001823.hdr.sgml : 19941111 ACCESSION NUMBER: 0000950123-94-001823 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE 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: 94558601 BUSINESS ADDRESS: STREET 1: PERRYVILLE CORPORATE PARK CITY: CLINTON STATE: NJ ZIP: 08809 BUSINESS PHONE: 9087304090 10-Q 1 FOSTER WHEELER CORPORATION 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 September 30, 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 September 30, 1994 was 35,788,125 shares. 2 FOSTER WHEELER CORPORATION INDEX
Page No. -------- Part I Financial Information: Item 1 - Financial Statements: Condensed Consolidated Balance Sheet at September 30, 1994 and December 31, 1993 2 Condensed Consolidated Statement of Earnings Three and Nine Months Ended September 30, 1994 and September 24, 1993 3 Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 1994 and September 24, 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)
September 30, December 31, 1994 1993 ASSETS (Unaudited) - ------ ------------ -------------- Current Assets: Cash and cash equivalents $ 234,611 $ 249,514 Short-term investments 133,938 127,876 Accounts and notes receivable 454,356 442,499 Contracts in process 143,323 87,076 Inventories 25,187 24,500 Prepaid and refundable income taxes 43,695 39,000 Prepaid expenses 11,395 12,989 ---------- ---------- Total Current Assets 1,046,505 983,454 Notes and accounts receivable - long-term 53,896 40,560 Investments and advances 43,769 34,758 Land, buildings and equipment - at cost less accumulated depreciation: 1994 - $240,359; 1993 - $217,332 564,104 567,216 Cost in excess of net assets of subsidiaries acquired 8,168 4,098 Deferred charges and prepaid pension cost 175,174 160,967 Deferred income taxes 1,060 15,148 ---------- ---------- Total Assets $1,892,676 $1,806,201 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Current installments on long-term debt $ 30,515 $ 32,523 Bank loans 112,558 59,725 Accounts payable and accrued expenses 277,234 292,738 Estimated cost to complete long-term contracts 270,796 287,508 Advance payments by customers 117,656 76,462 Income taxes 23,838 30,033 ---------- ---------- Total Current Liabilities 832,597 778,989 Long-term debt, less current installments 373,873 396,741 Other long-term liabilities, deferred credits, postretirement benefits other than pensions and minority interest in subsidiary companies 215,254 211,604 Deferred income taxes 21,113 18,691 ---------- ---------- Total Liabilities 1,442,837 1,406,025 ---------- ---------- Stockholders' Equity: Common stock 35,833 35,707 Paid-in capital 38,206 35,076 Retained earnings 408,819 381,205 Accumulated translation adjustment (32,468) (51,261) ---------- ---------- 450,390 400,727 Less cost of treasury stock 551 551 ---------- ---------- Total Stockholders' Equity 449,839 400,176 ---------- ---------- Total Liabilities and Stockholders' Equity $1,892,676 $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 Nine Months Ended -------------------------------- -------------------------------- September 30, September 24, September 30, September 24, 1994 1993 1994 1993 ---- ---- ---- ---- Revenues: Operating revenues $ 533,599 $ 616,426 $ 1,574,491 $ 1,849,460 Other income 8,985 18,571 25,693 36,321 ----------- ----------- ----------- ----------- Total revenues 542,584 634,997 1,600,184 1,885,781 ----------- ----------- ----------- ----------- Cost and expenses: Cost of operating revenues 458,566 545,162 1,345,092 1,634,865 Selling, general and administrative expenses 47,023 47,288 146,165 145,782 Other deductions 11,651 18,866 30,096 38,227 Minority interest 1,097 495 3,154 1,814 ----------- ----------- ----------- ----------- Total costs and expenses 518,337 611,811 1,524,507 1,820,688 ----------- ----------- ----------- ----------- Earnings before income taxes 24,247 23,186 75,677 65,093 ----------- ----------- ----------- ----------- Provision for income taxes: Federal and foreign 8,040 10,163 25,202 23,231 State 1,523 869 3,729 2,423 ----------- ----------- ----------- ----------- 9,563 11,032 28,931 25,654 ----------- ----------- ----------- ----------- Net earnings $ 14,684 $ 12,154 $ 46,746 $ 39,439 =========== =========== =========== =========== Weighted average number of common shares outstanding 35,807,325 35,656,161 35,779,377 35,646,770 =========== =========== =========== =========== Earnings per share $ .41 $ .34 $ 1.31 $ 1.11 ========== ========== ========== ========== Cash dividends paid per common share $ .185 $ .165 $ .535 $ .48 ========== ========== ========== ==========
See notes to financial statements. - 3 - 5 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS OF DOLLARS) (UNAUDITED)
Nine Months Ended --------------------------------------- September 30, 1994 September 24, 1993 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 46,746 $ 39,439 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization 32,000 39,849 Noncurrent deferred tax 15,576 11,910 Equity loss, net of dividends 68 261 Gain on sale of subsidiary's assets/other (2,258) (11,775) Changes in assets and liabilities: Receivables 3,093 32,126 Contracts in process and inventories (53,370) (29,424) Accounts payable and accrued expenses (28,605) (56,549) Estimated cost to complete long-term contracts (28,584) 94,594 Advance payments by customers 33,948 26,511 Income taxes (10,294) (11,554) Other assets and liabilities (15,459) (14,749) --------- --------- NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES (7,139) 120,639 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (28,662) (19,744) Changes in short-term investments 3,048 (28,523) Changes in investments and advances (6,547) (4,059) Purchase of subsidiary (net of cash purchased) (4,188) Partnership distribution (3,053) (3,235) Proceeds from sale of subsidiary's assets/other 5,741 23,704 --------- --------- NET CASH USED BY INVESTING ACTIVITIES (33,661) (31,857) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to stockholders (19,132) (17,101) Proceeds from exercise of stock options 2,338 598 Proceeds from long-term debt 5,893 45 Repayment of long-term debt (30,842) (12,051) Changes in short-term debt 47,457 (5,011) --------- --------- NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES 5,714 (33,520) --------- --------- Effect of exchange rate changes on cash and cash equivalents 20,183 (10,297) --------- --------- (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (14,903) 44,965 Cash and cash equivalents at beginning of year 249,514 146,485 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 234,611 $ 191,450 ========= ========= Cash paid during period: -Interest (net of amount capitalized) $ 20,884 $ 17,121 -Income taxes $ 12,590 $ 10,438
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 September 30, 1994, and the related condensed consolidated statements of earnings for the three and nine month periods and cash flows for the nine month periods ended September 30, 1994 and September 24, 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 September 30, 1994 and September 24, 1993, the suits pending numbered approximately 46,300 and 34,800, 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 36,300 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 September 30, 1994, the consolidated - 5 - 7 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) (Continued) Tangible Net Worth was $570,466. 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 September 30, 1994 this ratio was .32 to 1. 4. A total of 1,086,140 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 September 30, 1994 of $4,471,469 as compared to a backlog as of September 24, 1993 of $3,758,035. 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 Nine Months Ended ---------------------------------- ---------------------------------- September 30, September 24, September 30, September 24, ------------- ------------- ------------- ------------- 1994 1993 1994 1993 ---- ---- ---- ---- Interest income $6,509 $6,876 $18,613 $19,465 ====== ====== ======= ======= Interest cost $8,456 $8,696 $25,519 $25,690 ====== ====== ======= =======
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 nine months ended September 30, 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 46,746 46,746 Dividends paid - common (19,132) (19,132) Sold under stock options 125,582 126 2,212 2,338 Tax benefits related to incentive plan and stock options 918 918 Current period translation adjustment 18,793 18,793 ---------- ------- ------- -------- -------- ------- ------ -------- Balance September 30, 1994 35,832,564 $35,833 $38,206 $408,819 $(32,468) 20,129 $(551) $449,839 ========== ======= ======= ======== ======== ======= ====== ========
- 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 nine months ended September 30, 1994 vs. three and nine months ended September 24, 1993. The consolidated backlog of unfilled orders as of September 30, 1994 totaled $4.5 billion, the highest in the history of the Corporation. On a consolidated basis, this represented a 19% increase over the amount reported for September 1993. Unfilled orders of the Engineering and Construction Group increased by approximately 17% 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 28% increase in unfilled orders due primarily to the orders taken by Foster Wheeler Energy Corporation. New orders booked for the three and nine months ended September 30, 1994 amounted to approximately $770 million and $2.3 billion, respectively. In comparison to 1993, these amounts represented increases of 9% for the three month period and 14% for the nine month period. These increases were primarily the result of significant bookings by two European Engineering and Construction subsidiaries and bookings recorded by Foster Wheeler Energy Corporation for projects located in the Asia- Pacific region. Operating revenues for the three and nine months ended September 30, 1994 decreased approximately $83 million and $275 million in comparison to 1993. These decreases resulted primarily from the European affiliates of the Engineering and Construction Group reporting lower revenues related to flow-thru costs. In comparison to 1993, other income decreased by $10.6 million for the nine month period and by $9.6 million for the quarter. During September 1993, the Corporation sold Thermacote Welco Company. The resulting gain was the primary reason for the decreases reported in other income for the three and nine months ended September 1994. In comparing both the three and nine month periods, selling general and administrative expenses remained at approximately the same levels as reported in 1993. In comparison to 1993, other deductions decreased by $8.1 million for the nine month period and by $7.2 million for the third quarter. These decreases were principally due to the acceleration in 1993 of the amortization of the cost in excess of net assets acquired relating to the asbestos abatement business. - 8 - 10 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) Net earnings increased by approximately $7.3 million (19%) for the nine month period and by $2.5 million (21%) for the three month period. The year-to-date increase was primarily due to the increased earnings reported within Energy Equipment Group by Foster Wheeler Energy Corporation and Foster Wheeler Energia, S.A. (in Spain). During the third quarter of 1993, the gain on the sale of Thermacote Welco Company was partially offset by the acceleration of the amortization of cost in excess of net assets acquired related to the asbestos abatement business. The Corporate and Financial Services Group reported lower losses of approximately $1.9 million for the third quarter of 1994 in comparison to 1993, primarily due to the costs associated with the 1993 settlement of a dispute related to the sale of a subsidiary which took place in 1988. B. Consolidated Financial Position Stockholders' equity for the nine months ended September 30, 1994 increased $49.7 million. The increases from net earnings $46.7 million and the change in the accumulated translation adjustment $18.8 million were partially offset by dividends to stockholders of $19.1 million. Since December 31, 1993, cash and cash equivalents have increased by $14.9 million. Cash generated from earnings of $92.1 million reduced by an increase in funding of working capital resulted in a use of cash from operating activities of $7.1 million. Cash was used to pay dividends of $19.1 million, long-term debt of $30.8 million and capital expenditures of $28.7. 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 None ITEM 5. - OTHER INFORMATION Subsequent to September 30, 1994, the Corporation finalized the acquisition of Enserch Environmental Corporation (EEC). EEC, formerly a division of Ebasco Services, Inc., is a full-service provider of hazardous and mixed waste investigation and remediation control services, wastewater treatment, waste management, risk analysis and environmental permitting. The existing Foster Wheeler environmental unit will be merged with the acquired company which will be named Foster Wheeler Environmental Corporation. ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit Number Exhibit ------- ------- 27 Financial Data Schedule (As filed as part of this report) 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: November 1, 1994 /S/ Richard J. Swift ---------------- -------------------------- Richard J. Swift (Chairman, President and Chief Executive Officer) Date: November 1, 1994 /S/ David J. Roberts ---------------- -------------------------- David J. Roberts (Vice Chairman and Chief Financial Officer) - 11 - 13 EXHIBIT INDEX -------------- Exhibit No. Description ------- ----------- 27 Financial Data Schedule (As filed as part of this Report) EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary of financial information extracted from the condensed consolidated balance sheet and statement of earnings for the 9 months ended September 30, 1994 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-30-1994 JAN-01-1994 SEP-30-1994 234,611 133,938 454,356 0 168,510 1,046,505 804,463 240,354 1,892,676 832,597 373,873 35,833 0 0 414,006 1,892,676 1,574,491 1,600,184 1,345,092 1,345,092 0 0 8,550 75,677 28,931 46,746 0 0 0 46,746 1.31 1.31
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