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AIR & WATER TECHNOLOGIES REPORTS 1992 RESULTS OF OPERATIONS

 BRANCHBURG, N.J., Dec. 22 /PRNewswire/ -- Air & Water Technologies Corporation (AMEX: AWT), a leading environmental treatment and services company, reported that it closed its 1992 fiscal year with a record high in new orders and continued growth in backlog. The company reported a loss of 30 cents per share for the quarter ended Oct. 31, 1992, compared to net income of 3 cents in the fourth quarter of the prior year. As further described below, the results for the fourth quarter include a $7 million charge, or 28 cents per share, for costs associated with the company's litigation with the Puerto Rico Aqueduct and Sewer Authority ("PRASA"). For the year ended Oct. 31, 1992, the company reported a net loss of $10 million or 40 cents per share compared to a net loss of $25.9 million or $1.15 per share in fiscal 1991. Operating income was $15.4 million in fiscal 1992 (including the $7 million PRASA charge) compared to an operating loss of $3.5 million in fiscal 1991.
 Included in the 1991 results was a one-time $16 million pre-tax restructuring charge (68 cents per share after tax) relating to costs associated with various integration initiatives and expenses relating to the merger between the company and Metcalf & Eddy Companies Inc. which was completed on Oct. 31, 1991. The 12-month per share results include 27 cents and 28 cents in 1992 and 1991, respectively, of non-cash charges related to goodwill amortization.
 As a result of developments relating to its litigation with PRASA, the company has recorded a $7 million pre-tax charge to earnings in the fourth quarter. The company is suing PRASA for approximately $37.4 million in delinquent payments and up to $52 million including damages. The charge results from the company's consideration of the status of this litigation to date including the additional complexities resulting from a recent ruling by the Supreme Court of the Commonwealth of Puerto Rico in a case brought by the Puerto Rico College of Engineers against Metcalf & Eddy, Inc. ("M&E"), a wholly owned subsidiary of the company, and PRASA. This is ruling held that certain portions of a multi-year contract to repair, rehabilitate or decommission 82 sewage treatment plants between M&E and PRASA that pertained to design engineering were invalid as contrary to Puerto Rican law insofar as they called for the practice of engineering by M&E. This action, originally filed in September 1986 by the Puerto Rican College of Engineers ("The Colegio"), an island-wide professional engineering organization, sought a declaratory judgement that the engineering design portion of M&E's contract violated a Puerto Rican law prohibiting corporations from practicing engineering. The company has filed a Motion for Reconsideration that remains undecided at this date. During 1992, in addition to the company's $7 million charge, the company incurred $2 million in legal fees and sustained interest expense of approximately $3 million as a result of the nonpayment of the PRASA receivable.
 The Colegio decision complicates further what is complex commercial litigation between the company and PRASA. In particular, uncertainty exists as to how the Federal District Court in the PRASA case will interpret and apply the Colegio decision to the facts before it. Because of this uncertainty, at this time the company is unable to determine with any specificity what impact the Colegio decision will have on its efforts to recover monies from PRASA. Despite the foregoing, the company believes that it has performed substantially in accordance with the terms of its contract and that, ultimately, at least a majority of the sums due the company will be realized.
 In terms of non-PRASA related business, the company's operating income had been impacted negatively by planned spending to support bids, proposals, and other marketing activities as well as to maintain capacity to carry out work currently in backlog, selections and outstanding proposals. In addition to the growth in backlog and new orders, this investment has resulted in additional work where the company has been selected by clients and is concluding either contract negotiations or the scope of task orders from existing contracts. New orders for 1992 were $829 million compared to $658 million for 1991, a 26 percent increase. Backlog increased from $760 million at Oct. 31, 1991 to $825 million at Oct. 31, 1992, a 9 percent increase.
 According to Eckardt C. Beck, chairman, president and chief executive officer of AWT, "the company was very successful in 1992 in converting the investment spending of the past few years into tangible results in terms of new orders, selections, and backlog. We believe that Research-Cottrell has captured a dominant market share of the awards to date resulting from the Clean Air Act Amendments of 1990 in the key product lines of electrostatic precipitator rebuilds, continuous emissions monitors (KVB Analect) and chimneys (Custodis). Metcalf & Eddy has had several early successes in the large federal government market for facility closure and clean-up work with the Departments of Defense and Energy. The company was awarded or selected on over $200 million of such projects in 1992.
 Beck stated that the company's focus in 1993 will be on "moving that strong backlog into sales, controlling costs in line with the business, and focusing marketing activities on those opportunities where we have the best chance of success that will provide the greatest return on our investment. Given the wealth of opportunities in our bid pipeline, we can sustain a reasonable amount of growth while at the same time being highly selective." Beck went on to say that "because of the uncertainty surrounding the rate at which clients move forward with their planned capital spending and release of projects, we will focus very strongly on cost control. In addition to the rate at which clients release work, we will also continue to be impacted by the mix of work in the company's various market segments. As the economy improves, we expect to be well positioned to capitalize on a higher level of capital and maintenance spending on the part of our clients."
 Air & Water Technologies Corporation, through its operating units, Research-Cottrell, Inc., Metcalf & Eddy, and Residuals Management, provides a broad range of services in the areas of air pollution control, water resource management, and waste by-product disposal and reuse. Through its AWT Capital group, the company also provides services relating to the financing of environmental facilities and systems.
 AIR & WATER TECHNOLOGIES CORPORATION
 Consolidated Statements of Operations
 (in thousands, except per share data)
 (unaudited)
 Three Months Twelve Months
 ending Oct. 31 ending Oct. 31
 1992 1991 1992 1991
 Sales $207,967 $178,943 $719,089 $657,482
 Cost of Sales 156,714 131,384 529,853 487,520
 Gross Margin 51,253 47,559 189,236 169,962
 Selling, general and
 administrative expenses 43,963 38,768 160,075 151,255
 Amortization of goodwill 1,691 1,586 6,745 6,183
 PRASA litigation 7,000 --- 7,000 ---
 Restructuring charge --- --- --- 16,000
 Operating income (loss) (1,401) 7,205 15,416 (3,476)
 Interest expense (6,213) (5,617) (23,108) (21,973)
 Interest income 678 305 1,335 2,620
 Other expense, net (714) (250) (2,382) (1,091)
 Income (loss) before
 income taxes and minority
 interest (7,650) 1,643 (8,739) (23,920)
 Income tax provision (benefit) (192) 591 1,032 2,065
 Minority interest 68 374 265 (90)
 Net income (loss) (7,526) 678 (10,036) (25,895)
 Net income (loss) per share (30 cents) 3 cents (40 cents) ($1.15)
 Weighted average number of
 shares outstanding 24,814 22,446 24,812 22,437
 -0- 12/22/92
 /CONTACT: Lucinda Edmonds of Air & Water Technologies Corporation, 617-246-5200/
 (AWT)


CO: Air & Water Technologies Corporation ST: New Jersey, Massachusetts IN: SU: ERN

TM -- NE015 -- 9361 12/22/92 18:34 EST
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Date:Dec 22, 1992
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