The Shaw Group Reports Fourth Quarter and Year-End Results; Backlog Increases to Record $253 Million; Company Signs Letter of Intent to Acquire Cojafex B.V.

BATON ROUGE, La.--(BUSINESS WIRE)--Oct. 21, 1997--The Shaw Group Inc. (NYSE:SGR) today reported financial results for its fourth quarter and fiscal year ended Aug. 31, 1997.

For the fourth quarter ended Aug. 31, 1997, the Company generated sales of $88,231,000, up approximately 16 percent from the $76,161,000 recorded for the fourth quarter of fiscal 1996. Net income nearly doubled to $3,760,000, or $0.30 per share, from net income of $1,922,000, or $0.19 per share, recorded for the same period in the prior year.

For the year ended Aug. 31, 1997, revenues increased roughly 36 percent to $338,350,000 compared to $249,359,000 generated in fiscal 1996. Net income more than doubled to $14,048,000, or $1.21 per share, from $6,618,000, or $0.68 per share, recorded for fiscal 1996.

Gross margin for the fourth quarter of fiscal 1997 was 19.3 percent compared to 15.4 percent recorded for the same period of the prior fiscal year. Gross margin for fiscal 1997 was 18.9 percent compared to 16.1 percent generated in fiscal 1996. The improvement in gross margin for fiscal 1997 primarily reflects improved profitability on domestic process jobs, an increase in revenues from the power segment and an increase in the sale of value-added services, such as engineering and design.

Shaw also reported backlog of approximately $253 million at Aug. 31, 1997. This represents a 64 percent increase over the $154 million that was reported at Aug. 31, 1996 and an increase of 28 percent over the $197 million that was reported at May 31, 1997. Strong domestic project bookings across all major industry segments contributed to the company's record backlog for the period.

J.M. Bernhard Jr., Shaw's president and chief executive officer, commented, "We are pleased to report another year of record sales, earnings and backlog and believe we've built a foundation for even stronger performance in the future.

Bernhard continued, "During fiscal 1997, the company took steps to build on its industry leadership position. We expanded Shaw's services to include industrial construction and maintenance, which broadens our project scope. And with the acquisition of NAPTech, we increased our pipe bending capacity and have expanded into new markets, such as the oil and gas pipeline and mining segments.

"On the international front, the company signed a letter of intent in August with a Chinese partner for joint-venture ownership of a pipe fabrication facility in Dalian, China. Also, innovative project solutions that incorporate on-site induction bending enable the company to more effectively compete for work in areas where we don't have a physical presence," Bernhard concluded.

Separately, the company announced that it has entered into a letter of intent with Vekamaf Holding B.V., of Rotterdam, Holland, whereby Shaw will acquire all of the outstanding capital stock of Cojafex B.V., a Vekamaf subsidiary. Under the terms of this agreement, Shaw will pay an aggregate of $9.5 million, $5 million of which will be paid at the closing of the transaction and the remainder of which will be paid over six years. The closing of the transaction, which is contingent upon the favorable outcome of a due diligence review and the negotiation and execution of definitive agreements, among other things, is expected to take place in January 1998.

Cojafex owns the technology for certain induction pipe bending machines used for bending pipe and other carbon steel and alloy items for industrial, commercial and architectural applications. Shaw currently has eight Cojafex induction bending machines and is the exclusive, worldwide distributor of the Cojafex "PB Special 16" machine. Shaw is supplying Cojafex bending machines packaged with fabrication technology and technical services on-site in India for one of the largest grass-roots refinery projects ever planned.

The company noted that its income statements for all prior periods have been restated to include NAPTech's operating results. NAPTech was acquired by Shaw effective as of Jan. 27, 1997 and the acquisition was accounted for using the pooling-of-interests method, which has resulted in a restatement of the company's financial statements for all periods presented.

The Shaw Group is a leading supplier of integrated piping systems and a provider of industrial construction and maintenance services for the electric power and process industries worldwide. Shaw is also a leading U.S. manufacturer of specialty piping components, with a manufacturing complex in Shreveport, La. Shaw, which operates mainly through wholly owned subsidiaries, has pipe fabrication facilities in Louisiana, Oklahoma, South Carolina, Utah and a facility in Bahrain. The Company also has design and engineering offices in New Jersey, and in Toronto, Canada and pipe supports manufacturing facilities in Texas and California.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not historical facts may be forward-looking. The forward- looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions; the impact of competitive products and pricing; product demand and acceptance risks; the presence of competitors with greater financial resources; costs and difficulties associated with the integration and administration of distribution arrangements; capacity and supply constraints or difficulties; the results of financing efforts; delays or difficulties in the production, delivery or installation of products; the strength or weakness of the U.S. dollar relative to foreign currencies; and other risks detailed from time to time in Shaw's Securities and Exchange Commission filings. The Shaw Group Inc. assumes no obligation to update the information included in this press release. -0-

                 THE SHAW GROUP INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
              ($ in thousands, except per share amounts)

                             Three Months Ended  Fiscal Year Ended
                                 Aug. 31,             Aug. 31,
                             1997        1996      1997        1996
Income:
    Sales                  $ 88,231   $ 76,161  $ 338,350  $ 249,359
    Cost of sales            71,166     64,464    274,234    209,212
       Gross profit          17,065     11,697     64,116     40,147

General and
 administrative expenses     10,255      8,011     37,881     26,679

       Operating income       6,810      3,686     26,235     13,468

Interest expense             (1,422)    (1,790)    (6,778)    (4,823)
Other income (expense), net     (86)       881        155        923

                             (1,508)      (909)    (6,623)    (3,900)

Income before income taxes    5,302      2,777     19,612      9,568

Provision for income taxes    1,409        672      6,001      3,053
Income before earnings from
 unconsolidated entities      3,893      2,105     13,611      6,515

Earnings (losses) from
 unconsolidated entities       (133)      (183)       437        103

       Net income          $  3,760   $  1,922   $ 14,048  $   6,618

Weighted average number of
 shares outstanding          12,467     10,255     11,632      9,758

Earnings per common share  $   0.30   $   0.19   $   1.21  $    0.68


    Operating results have been restated to include NAPTech, which
was acquired by the Company in January 1997 and was accounted for
using the pooling-of-interests method.

CONTACT: The Shaw Group Inc., Baton Rouge

Edward L. Pagano or Laurie J. Schultz, 504/296-1140