KHD Khd Humboldt Wedag International Ltd

- Backlog at $774.3 million - HONG KONG, May 14 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. (NYSE:KHD) today announced results for the three months ended March 31, 2009. Unless otherwise noted, all figures are in US dollars. For the three months ended March 31, 2009, KHD reported revenues of $112.1 million with a net income of $1.2 million, or $0.04 per share on a diluted basis, which included $7.9 million in restructuring charges, primarily due to costs associated with involuntary employment terminations, facilities closure and write-downs of inventory. This compares to revenues in the first quarter of 2008 of $136.8 million and net income for that period of $7.4 million, or $0.24 per share on a diluted basis. Our margins for the first quarter of 2009 were 17.2% versus 18.4% in the first quarter of 2008. KHD's balance sheet remains strong - as of March 31, 2009, our cash and cash equivalents and short-term deposits totaled $366.0 million; working capital was $271.4 million; and shareholders' equity was $253.4 million. KHD's current ratio was 1.69 and its long-term debt-to-equity ratio was 0.04. CEO Jouni Salo commented, "Our focus in 2009 is to manage our assets in a manner that both conserves shareholder value and structures our company to capitalize on opportunities as the world emerges from the recent crisis conditions. During and subsequent to the close of our first quarter in 2009, we have made good progress in our restructuring efforts, while maintaining our reputation for providing quality services and products to our customers. Over the past months we have discussed the financial situation and its impact on our customers and the anticipated impacts on our own business. The first quarter operating results reflect the effects, lower volume of new orders, some impact on our revenues and profitability before restructuring. "In order to improve our ability to offer our customers cost-effective and well-executed solutions, we implemented a substantial restructuring of our internal reporting functions. Our new structure, effective May 1, 2009, has four Customer Service Centers ("CSC"): the Americas based in Atlanta; South Asia based in New Delhi; Russia and the CIS based both in Moscow and Dessau; Europe, the Middle East and Africa, currently based in Cologne. Customers will be directly served and supported from the CSC in their regions. Each CSC will exploit the strength of KHD's knowledge, technologies and experience in delivering quality products and services to our customers. KHD Central, operating in Vienna and Cologne, will manage and support the Customer Service Centers in implementing KHD operating strategies." For comparative purposes, all of the following amounts for order intake and backlog were translated directly from Euros to US dollars at 1.326, the exchange rate prevailing on March 31, 2009. Order intake is defined as the total value of all orders received during the respective period, while order backlog is defined as the value of orders received but not yet fulfilled. Order intake for the quarter ended March 31, 2009, was $81.1 million, a decrease of 72 percent from 2008. Of this total, 62 percent came from Asia, 14 percent from the Middle East and 11 percent from Russia and Eastern Europe. Of the first quarter 2009 order intake, $70.2 million came from cement and $10.9 from coal and minerals. CFO Alan Hartslief commented, "We are pleased to note that during the first quarter of 2009, new customer requests to delay or cancel projects were not significant and certain projects which were previously considered at risk are back on track due to our clients successfully obtaining the necessary financing." Order backlog as of March 31, 2009 was $774.3 million, a decrease of 32 percent from March 31, 2008, and a decrease of 9 percent from the year ended December 31, 2008. Of the backlog going into 2009, 44 percent is associated with projects in Russia and Eastern Europe, 35 percent with projects in Asia and 14 percent with projects in the Middle East. Of these, $716.0 million are associated with cement projects and $58.3 are coal and minerals projects. Mr. Hartslief added, "Subsequent to the quarter ended March 31, 2009, as part of our review of our non-core assets we entered into and completed an agreement with Mass Financial Corp, on May 12, 2009, for the redemption of the preferred shares of Mass Financial Corp. and its former subsidiary. The details of the transaction are provided in our Form 6-K filing. This transaction substantially completes the divestiture of our legacy assets." Mr. Salo concluded, "A key component of the restructuring effort is the divestiture of the coal and minerals related assets. KHD is pleased to announce that it has entered into a memorandum of understanding for the sale of these assets. The closing of this transaction is expected before the close of the current quarter and is subject to a due diligence review. These assets include a portion of our sales, engineering and management activities in Cologne, the entire workshop in Cologne, all of our operations in Calcutta, India and South Africa and a portion of our operations in China and Russia. Also approximately 300 staff members are currently assigned to these assets." Shareholders are encouraged to read the entire Form 6-K, which has been filed with the SEC, for a greater understanding of KHD. The Form 6-K is also available on the Company's website. Today at 10:00 a.m. EDT (7:00 a.m. PDT), a conference call will be held to review the Company's results; this call will be broadcast live over the Internet at http://www.khdhumboldt.com/ or http://www.earnings.com/. An online archive will be available immediately following the call and will continue for seven days or to listen to the audio replay by phone, dial: 1 (888) 286 8010 using conference ID number: 92279628. International callers should dial: 1 (617) 801 6888. About KHD Humboldt Wedag International Ltd. KHD Humboldt Wedag International Ltd. owns companies that operate internationally in the industrial plant engineering and equipment supply industry, and specializes in the cement, coal and minerals processing industries. To obtain further information on the Company, please visit our website at http://www.khdhumboldt.com/ Disclaimer for Forward-Looking Information Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. The worldwide macroeconomic downturn has resulted in the prolonging or cancellation of some of our customers' projects and may negatively affect our customers' ability to make timely payment to us. Further, it may result in a further decrease in the demand for our products or services. Any of these may have a material adverse effect on our operating results and financial condition. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain assumptions. These assumptions, which include management's current expectations, estimates and assumptions about certain projects and the markets the Company operates in, the global economic environment, interest rates, exchange rates and our ability to attract and retain customers and to manage our assets and operating costs, may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a continued downturn in general economic conditions in Asia, Europe, Russia, Eastern Europe, the Middle East, the United States and internationally including, the continued worldwide economic downturn resulting from the effects of the sub-prime lending and general credit market crises, volatile energy costs, decreased consumer confidence and other factors, (2)continuing decreased demand for our products, including the renegotiation, delay and/or cancellation of projects by our customers and the reduction in the number of project opportunities, (3) a decrease in the demand for cement, minerals and related products, (4) the number of competitors with competitively priced products and services, (5) product development or other initiatives by our competitors, (6) shifts in industry capacity, (7) fluctuations in foreign exchange and interest rates, (8) fluctuations in availability and cost of raw materials or energy, (9) delays in the start of projects included in our forecasts, (10) delays in the implementation of projects included in our forecasts and disputes regarding the performance of our services, (11) the uncertainty of government regulation and politics in Asia and the Middle East and other markets, (12) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, (13) the timing and extent of our restructuring program and the restructuring charges to be incurred in connection therewith, and (14) other factors beyond our control. Additional information about these and other assumptions, risks and uncertainties are set out in the "Risk Factors" section in our Form 6-K filed with the Securities and Exchange Commission and the "Risks and Uncertainties" section in our MD&A filed with Canadian security regulators. Contact Information: Allen & Caron Inc. Joseph Allen (investors) 1 (212) 691-8087 or Brian Kennedy (media) 1 (212) 691-8087 Rene Randall KHD Humboldt Wedag International Ltd. 1 (604) 683-8286 ex 224 - UNAUDITED INTERIM FINANCIAL TABLES FOLLOW - KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS March 31, 2009 and December 31, 2008 (U.S. Dollars in Thousands) ASSETS 2009 2008 ---- ---- Current Assets Cash and cash equivalents $363,080 $409,087 Short-term cash deposits 2,949 0 Securities 3,066 2,987 Restricted cash 30,824 32,008 Accounts receivable, trade 81,399 62,760 Other receivables 23,966 28,313 Inventories 94,929 110,161 Contract deposits, prepaid and other 56,986 58,694 Future income tax assets 5,154 7,679 ----- ----- 662,353 711,689 Non-current Assets Property, plant and equipment 1,822 2,489 Interest in resource property 23,757 24,861 Equity method investments 268 325 Future income tax assets 10,640 6,339 Investment in preferred shares of former subsidiaries 18,585 19,125 Other non-current assets 790 830 --- --- 55,862 53,969 ------ ------ $718,215 $765,658 ======== ======== KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS (cont'd) March 31, 2009 and December 31, 2008 (U.S. Dollars in Thousands) LIABILITIES 2009 2008 ---- ---- Current Liabilities Accounts payable and accrued expenses $146,502 $178,582 Progress billing above costs and estimated earnings on uncompleted contracts 161,982 171,843 Advance payments received from customers 15,980 11,331 Income tax liabilities 4,971 9,112 Deferred credit, future income tax assets 3,563 4,212 Accrued pension liabilities, current portion 2,055 2,158 Provision for warranty costs, current portion 28,119 30,856 Provision for restructuring costs 6,648 0 Provision for supplier commitments on Terminated customer contracts 21,135 23,729 ------ ------ 390,955 431,823 Long-term Liabilities Long-term debt, less current portion 10,777 11,313 Accrued pension liabilities, less current portion 27,823 29,209 Provision for warranty costs, less current portion 7,318 7,524 Deferred credit, future income tax assets 3,978 4,176 Future income tax liability 11,171 7,646 Other long-term liabilities 8,260 8,344 ----- ----- 69,327 68,212 ------ ------ Total liabilities 460,282 500,035 MINORITY INTERESTS 4,532 3,709 SHAREHOLDERS' EQUITY Common stock, without par value; authorized unlimited number 143,826 143,826 Treasury stock (93,793) (93,793) Contributed surplus 8,512 7,623 Retained earnings 156,886 155,681 Accumulated other comprehensive income 37,970 48,577 ------ ------ 253,401 261,914 ------- ------- $718,215 $765,658 ======== ======== KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended March 31, 2009 and 2008 (U.S. Dollars in Thousands, Except per Share Data) 2009 2008 ---- ---- Revenues $112,128 $136,836 Cost of revenues 92,273 111,629 Reduction in loss on terminated customer contracts (507) 0 Restructuring costs, write-down of inventories 1,121 0 ----- --- Gross profit 19,241 25,207 Income from interest in resource property 2,130 3,966 General and administrative expense (13,981) (12,845) Stock-based compensation - general and administrative (889) (1,063) Restructuring costs (6,756) 0 ------- --- Operating income (loss) (255) 15,265 Interest income 2,317 5,062 Interest expense (694) (519) Foreign currency transactions (losses), net 1,583 (8,425) Share of loss of equity method investee (21) 0 Other expenses, net (267) (1,342) ----- ------- Income before income taxes and minority interests 2,663 10,041 Provision for income taxes: Income taxes (971) (1,691) Resource property revenue taxes (491) (876) ----- ----- (1,462) (2,567) ------- ------- Income before minority interests 1,201 7,474 Minority interests 4 (43) --- ---- Net income $1,205 $7,431 ====== ====== Basic earning per share $0.04 $0.25 ----- ===== Diluted earnings per share $0.04 $0.24 ===== ===== Weighted average of common shares outstanding - basic 30,522,645 30,234,127 - diluted 30,522,645 30,528,155 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of March 31, 2009 (U.S. Dollars in Thousands, Except per Share Data and Ratios) Cash and cash equivalents $363,080 Short-term deposits 2,949 Short-term securities 3,066 Restricted cash 30,824 Working capital 271,398 Total assets 718,215 Shareholders' equity 253,401 Book value per share 8.30 Current ratio 1.69 Long-term debt to equity ratio 0.04 DATASOURCE: KHD Humboldt Wedag International Ltd. CONTACT: investors, Joseph Allen, , or media, Brian Kennedy, , both of Allen & Caron Inc., +1-212-691-8087; or Rene Randall of KHD Humboldt Wedag International Ltd., +1-604-683-8286, ext. 224, Web Site: http://www.khdhumboldt.com/

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