The Shaw Group Inc. (NYSE: SHAW) today announced financial results for the third quarter of fiscal year 2012, which ended May 31, 2012.

Because of the non-cash, non-operational impact on reported earnings resulting solely from movement in exchange rates between the U.S. dollar and the Japanese yen, Shaw uses financial results excluding its Investment in Westinghouse segment to measure and communicate financial performance internally and externally. As previously announced, Shaw's subsidiary, Nuclear Energy Holdings (NEH), intends to exercise put options to sell its investment in Westinghouse back to Toshiba.

For the third quarter of fiscal year 2012, Shaw's Westinghouse segment includes a non-cash, non-operating foreign exchange translation loss of $22.8 million pre-tax, or $14.0 million after tax. The prior year's period included a non-cash foreign exchange translation loss of $15.0 million pre-tax, or $9.2 million after tax.

The following results include Shaw's Westinghouse segment:

     
Three Months Ended May 31

Including the Westinghouse Segment

      FY 2012     FY 2011
Revenues     $1.6 billion     $1.5 billion
Gross Profit     $56.5 million     $10.1 million
EBITDA     $8.3 million     ($78.8) million
Net Income (Loss) Attributable to Shaw     ($16.0) million     ($70.0) million
Earnings Per Share     ($0.24)     ($0.89)
Net Cash From Operating Activities     ($24.3) million     $51.2 million
Total Adjusted Cash     $835 million     $1.1 billion
   

The following results exclude Shaw's Westinghouse segment:

     

Three Months Ended May 31

Excluding the Westinghouse Segment

      FY 2012     FY 2011
Revenues     $1.6 billion     $1.5 billion
Gross Profit     $56.5 million     $10.1 million
EBITDA     $14.9 million     ($85.9) million
Net Income (Loss) Attributable to Shaw     ($6.0) million     ($67.8) million
Earnings Per Share     ($0.09)     ($0.86)
   
 

"As we progress with the completion of our planned divestiture of the Energy & Chemicals segment, we are experiencing volatility in our third quarter earnings and expect this to continue into the fourth quarter. However, most of our operating units performed well in the quarter, with our Plant Services and Environmental & Infrastructure segments continuing to perform exceptionally well," said J.M. Bernhard Jr., chairman, president and chief executive officer of Shaw. "Additionally, the ramp up of our nuclear projects has been slower than planned due to the delays in the combined licenses for the U.S. projects. Those projects are now moving forward, and we expect them to continue to have a positive impact on our Power and Fabrication & Manufacturing segments."

Third Quarter Fiscal Year 2012 Overview:

  • Shaw entered into an agreement to sell substantially all of its Energy & Chemicals business to Technip for approximately $300 million, which is targeted for completion in the fourth quarter of fiscal year 2012:
    • The Energy & Chemicals segment recognized a loss of $33.0 million in the quarter ($20.3 million after-tax), or $0.31 per share, primarily related to the divestiture and other costs associated with winding down operations
    • Shaw expects to recognize a gain in the fourth quarter of approximately $49 million pre-tax and a charge of approximately $8 million in fiscal year 2013, both related to the divestiture and other costs associated with winding down operations
    • The net gain related to the divestiture and other costs associated with winding down operations is expected to be approximately $15 million, with timing and final amounts dependent on the closing of the transaction
  • Shaw previously announced a settlement with GenOn Mid-Atlantic LLC resulting in a charge to earnings in the third quarter of $20.1 million pre-tax ($12.4 million after-tax) or $0.19 per share. Shaw collected $107 million in cash proceeds from the settlement in June 2012.
  • Power segment results were impacted by net $6.6 million pre-tax ($4.1 million after-tax), or $0.06 per share, related to a decrease in a project's earnings resulting from construction cost increases on a new-build coal-fired plant that is in its performance testing phase.
  • Shaw's total backlog at May 31, 2012, is $18.2 billion, reflecting a $1.0 billion net reduction from two major nuclear power projects in the United States:
    • Shaw received full notice to proceed from SCANA for its V.C. Summer nuclear power project located in South Carolina in April 2012; the multi-billion dollar balance of the contract value was added to Shaw's backlog of unfilled orders in the third quarter
    • Progress Energy's multi-billion dollar nuclear power project in Levy County, Fla., was removed from backlog due to a recent client decision to further delay the project schedule beyond a five-year time frame required to retain this project in our backlog of unfilled orders
  • Shaw is teaming with NET Power LLC, Exelon and Toshiba to develop a new technology for the global power and oil markets. Shaw will acquire up to 50 percent of NET Power LLC and will have exclusive worldwide rights to engineer, procure and construct NET Power plants. As milestones are completed for the four phases of the project, Shaw will invest up to $50.4 million in cash and in-kind services.

Strategic Initiatives:

Shaw has undertaken several strategic initiatives this fiscal year. Shaw's subsidiary, Nuclear Energy Holdings, intends to exercise its put options to sell its investment in Westinghouse back to Toshiba. Shaw also previously announced it is selling its Energy & Chemicals segment to Technip, with the final transaction expected in the fourth quarter of fiscal year 2012.

Shaw is seeking to redeploy its cash through potential merger and acquisition opportunities, technology acquisitions and/or returning cash to shareholders on a regular basis. Shaw expects to make a decision on how to strategically redeploy its cash by the end of this fiscal year.

If the company does not pursue another opportunity, it expects to continue with the share repurchase program. Accordingly, Shaw's board of directors has authorized the purchase of up to $500 million of outstanding shares of the company's common stock, which includes $326 million remaining under a previous authorization.

Fiscal Year 2012 Guidance:

Shaw is reaffirming its earnings guidance, which was previously updated during the second quarter of fiscal year 2012 to reflect the Energy & Chemical segment sale:

  • Revenue: approximately $5.5 - $6.0 billion (unchanged)
  • Diluted earnings per share, excluding Westinghouse: $2.20 - $2.30 per share (unchanged)
  • Operating cash flow: approximately $100 million (unchanged)
  • Ending fiscal year 2012 backlog: approximately $18 billion (updated)

Conference Call and Webcast:

A conference call to discuss the company's financial results will be held Tuesday, July 10, 2012, at 9 a.m. Eastern time (8 a.m. Central time). A slide presentation will be posted on the Investor Relations page of Shaw's website at www.shawgrp.com approximately one hour prior to the conference call.

Interested parties may either dial 1.800.471.6718 to listen to the conference call live or access a live audio webcast on Shaw's website at www.shawgrp.com. A replay of the conference call will be available after the call by telephone, as well as on the company's website. To listen to the replay by telephone, dial 1.888.843.7419 and use pass code 32777162#.

Investment in Westinghouse:

Shaw's subsidiary Nuclear Energy Holdings has a 20 percent equity interest in companies collectively known as the Westinghouse Group. NEH financed this investment partially through issuing limited recourse Japanese yen-denominated bonds and, to mitigate the risk associated with foreign currency fluctuation, simultaneously entered into a yen-denominated put option agreement with Toshiba, which provides NEH the option to sell all or part of its equity interest to Toshiba and receive a pre-determined yen-denominated price for the shares.

For U.S. reporting purposes, the yen-denominated bonds are revalued at each quarter's end to the current U.S. dollar exchange rate; however, the yen-denominated put option, which naturally hedges the foreign exchange movements of the Japanese yen-denominated bonds, is not revalued at current exchange rates for U.S. financial reporting purposes. Therefore, our reported financial results frequently reflect the volatility of the yen-dollar exchange rates showing significant non-cash translation exchange gains or losses.

On Sept. 6, 2011, NEH announced that it intends to exercise its put options to sell the Westinghouse equity back to Toshiba. Under the terms of the put option agreements, the put options will be exercised automatically on or around Oct. 6, 2012, for cash settlement on Jan. 4, 2013. Proceeds from the sale would be used to repay the bonds in full on their scheduled maturity date of March 15, 2013.

Calculation of EBITDA:

Shaw defines EBITDA as earnings before interest expense, income taxes, depreciation and amortization. EBITDA is an important financial measure used by Shaw to assess performance. Although it is calculated using components derived from our financial statements prepared under generally accepted accounting principles (GAAP), EBITDA itself is not a GAAP measure.

A table reconciling EBITDA to its most directly comparable GAAP measure is included in the summarized financial information within this release. Calculations of EBITDA should not be viewed as a substitute for calculations under GAAP, including net cash provided by operations, operating income and net income attributable to Shaw. In addition, EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company.

Calculation of Total Adjusted Cash:

Shaw defines total adjusted cash as the sum of cash and cash equivalents, restricted and escrowed cash and cash equivalents, short-term investments and restricted short-term investments. These accounts include the amount of cash that can be accessed in a matter of days.

About Shaw:

The Shaw Group Inc. (NYSE: SHAW) is a leading global provider of engineering, construction, technology, fabrication, remediation and support services for clients in the energy, chemicals, environmental, infrastructure and emergency response industries. A Fortune 500 company with fiscal year 2011 annual revenues of $5.9 billion, Shaw has approximately 27,000 employees around the world and is a power sector industry leader according to Engineering News-Record's list of Top 500 Design Firms. For more information, please visit Shaw's website at www.shawgrp.com.

This press release contains forward-looking statements and information about our current and future prospects and our operations and financial results, which are based on currently available information. The forward looking statement s include assumptions about our operations, such as cost controls and market conditions, that may not be realized. Actual future results and financial performance could vary significantly from those anticipated in such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise.

Among the factors that could cause future events or transactions to differ from those we expect are those risks discussed under Item 1A "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended August 31, 2011, our Quarterly Reports on Form 10-Q for the quarters ended November 30, 2011, February 29, 2012, and May 31, 2012, and other reports filed with the Securities and Exchange Commission (SEC). Please read our "Risk Factors" and other cautionary statements contained in these filings.

As a result of these risks and others, actual results could vary significantly from those anticipated in this press release, and our financial condition and results of operations could be materially adversely affected.

 
 
 
THE SHAW GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2012 AND 2011
(In thousands, except per share amounts)
       
Three Months Ended Nine Months Ended
2012 2011 2012   2011
Revenues $ 1,560,768 $ 1,489,956 $ 4,553,107 $ 4,458,052
Cost of revenues   1,504,229     1,479,814     4,268,001     4,270,346  
Gross profit 56,539 10,142 285,106 187,706
Selling, general and administrative expenses 58,347 71,086 189,685 215,037
Impairment of note receivable   -     48,133     -     48,133  
Operating income (loss) (1,808 ) (109,077 ) 95,421 (75,464 )
Interest expense (1,918 ) (1,508 ) (4,850 ) (4,059 )

Interest expense on Japanese yen-denominated bonds, including accretion and amortization

(9,771 ) (10,340 ) (30,482 ) (31,235 )
Interest income 1,430 2,170 4,265 10,672

Foreign currency translation gains (losses) on Japanese yen-denominated bonds, net

(22,800 ) (15,043 ) 53,827 (74,362 )
Other foreign currency transaction gains (losses), net 527 2,497 1,404 6,459
Other income (expense), net   28     1,701     2,565     6,003  

Income (loss) before income taxes and earnings (losses) from unconsolidated entities

 (34,312 ) (129,600 ) 122,150 (161,986 )
Provision (benefit) for income taxes   (12,108 )   (48,051 )   46,261     (60,764 )

Income (loss) before earnings (losses) from unconsolidated entities

 (22,204 ) (81,549 ) 75,889 (101,222 )

Income from 20% Investment in Westinghouse, net of income taxes

9,990 13,701 11,680 17,981

Earnings (losses) from other unconsolidated entities, net of income taxes

  159     250     4,370     2,597  
Net income (loss) $ (12,055 ) $ (67,598 ) $ 91,939   $ (80,644 )
Less: Net income (loss) attributable to noncontrolling interests   3,954     2,354     6,216     4,115  
Net income (loss) attributable to Shaw $ (16,009 ) $ (69,952 ) $ 85,723   $ (84,759 )
 
Net income (loss) attributable to Shaw per common share:
Basic $ (0.24 ) $ (0.89 ) $ 1.26   $ (1.02 )
Diluted $ (0.24 ) $ (0.89 ) $ 1.24   $ (1.02 )
 
Weighted average shares outstanding:
Basic 65,932 78,748 67,925 82,948
Diluted 65,932 78,748 68,971 82,948

 
 
 
THE SHAW GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
       
May 31, 2012 August 31, 2011
 
ASSETS
Current assets:
Cash and cash equivalents ($73.9 million and $78.6 million related to variable interest entities (VIEs)) $ 426,961 $ 674,080
Restricted and escrowed cash and cash equivalents 42,729 38,721
Short-term investments ($2.9 million and $7.8 million related to VIEs) 122,014 226,936
Restricted short-term investments 242,999 277,316
Accounts receivable, including retainage, net ($39.2 million and $7.5 million related to VIEs) 577,812 772,242
Inventories 278,028 245,044
Costs and estimated earnings in excess of billings on uncompleted contracts, including claims 570,634 552,502
Deferred income taxes 321,012 367,045
Investment in Westinghouse 990,473 999,035
Current assets held for sale 84,995 -
Prepaid expenses and other current assets   100,186     138,260  
Total current assets 3,757,843 4,291,181
Investments in and advances to unconsolidated entities, joint ventures and limited partnerships 6,909 14,768
Property and equipment, net of accumulated depreciation of $366.9 million and $347.3 million 509,071 515,811
Goodwill 404,467 545,790
Intangible assets 3,113 17,142
Deferred income taxes 6,394 10,484
Long-term assets held for sale 176,120 -
Other assets   95,036     91,858  
Total assets $ 4,958,953   $ 5,487,034  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 659,359 $ 822,476
Accrued salaries, wages and benefits 110,922 132,857
Other accrued liabilities 159,459 199,947
Advanced billings and billings in excess of costs and estimated earnings on uncompleted contracts 1,282,592 1,535,037
Japanese yen-denominated bonds secured by Investment in Westinghouse 1,627,599 1,679,836
Interest rate swap contract on Japanese yen-denominated bonds 12,888 27,059
Current liabilities held for sale 68,458 -
Short-term debt and current maturities of long-term debt   11,615     349  
Total current liabilities 3,932,892 4,397,561
Long-term debt, less current maturities 5,308 630
Deferred income taxes 70,576 70,437
Long-term liabilities held for sale 231 -
Other liabilities   70,351     81,152  
Total liabilities   4,079,358     4,549,780  
Shaw shareholders' equity:
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding - -

Common stock, no par value, 200,000,000 shares authorized; 92,575,590 and 91,711,102 shares issued, respectively; and 65,984,349 and 71,306,382 shares outstanding, respectively

1,338,765 1,321,278
Retained earnings 414,178 328,455
Accumulated other comprehensive loss (119,157 ) (104,922 )
Treasury stock, 26,591,241 shares and 20,404,720 shares, respectively   (791,868 )   (639,704 )
Total Shaw shareholders' equity 841,918 905,107
Noncontrolling interests   37,677     32,147  
Total equity   879,595     937,254  
Total liabilities and equity $ 4,958,953   $ 5,487,034  

 
 
 
THE SHAW GROUP INC. AND SUBSIDIARIES
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2012 AND 2011
REVENUES BY GEOGRAPHY
(in millions, except for percentages)
               
Three Months Ended Nine Months Ended
2012   2011   2012   2011  
(in millions) % (in millions) % (in millions) % (in millions) %
United States $ 1,340.0 86 $ 1,330.7 89 $ 3,909.1 86 $ 3,821.9 86
Asia/Pacific Rim countries 140.7 9 66.5 5 385.1 9 399.4 9
Middle East 38.9 3 38.0 3 128.5 3 96.6 2
United Kingdom and other European countries 13.0 1 30.0 2 42.8 1 87.6 2
South America and Mexico 20.6 1 19.1 1 65.8 1 35.9 1
Canada 3.4 - 3.7 - 13.1 - 8.9 -
Other   4.2 -     2.0 -     8.7 -     7.8 -  
Total revenues $ 1,560.8 100 % $ 1,490.0 100 % $ 4,553.1 100 % $ 4,458.1 100 %
 
 
 
BACKLOG BY SEGMENT
(in millions, except for percentages)
 
May 31, 2012 % August 31, 2011 %
 
Power $ 9,224.5 51 $ 10,776.4 54
Plant Services 3,333.9 18 2,119.7 11
E&I 4,292.9 23 5,189.9 26
F&M 1,023.7 6 1,495.9 7
E&C   312.6 2     436.4 2  
Total backlog $ 18,187.6 100 % $ 20,018.3 100 %

 
 
 

FINANCIAL INFORMATION BY SEGMENT

FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2012 AND 2011
(in millions, except percentages)
       
Three Months Ended Nine Months Ended
2012 2011 2012 2011
 
Revenues:
Power $ 497.5 $ 546.5 $ 1,442.8 $ 1,609.8
Plant Services 292.4 286.0 911.3 743.8
E&I 482.5 461.3 1,354.5 1,369.9
F&M 130.2 102.4 382.1 302.2
E&C 158.2 93.8 462.4 432.4
Corporate   -     -     -     -  
Total revenues $ 1,560.8   $ 1,490.0   $ 4,553.1   $ 4,458.1  
 
Gross profit:
Power $ (12.9 ) $ 34.8 $ 22.2 $ 62.0
Plant Services 22.5 17.6 66.6 56.9
E&I 48.8 46.6 119.4 130.8
F&M 20.8 14.0 71.0 45.6
E&C (23.3 ) (104.0 ) 4.4 (110.9 )
Corporate   0.6     1.1     1.5     3.3  
Total gross profit $ 56.5   $ 10.1   $ 285.1   $ 187.7  
 
Gross profit percentage:
Power (2.6 )% 6.4 % 1.5 % 3.9 %
Plant Services 7.7 6.2 7.3 7.6
E&I 10.1 10.1 8.8 9.5
F&M 16.0 13.7 18.6 15.1
E&C (14.7 ) (110.9 ) 1.0 (25.6 )
Corporate   NM     NM     NM     NM  
Total gross profit percentage   3.6 %   0.7 %   6.3 %   4.2 %
 
NM - Not Meaningful
 
Selling, general and administrative expenses:
Power $ 8.7 $ 11.4 $ 26.1 $ 34.0
Plant Services 2.7 3.1 8.1 8.1
E&I 17.7 18.4 52.8 55.5
F&M 6.6 8.1 24.5 24.0
E&C 10.4 11.1 31.9 35.1
Investment in Westinghouse - 0.4 0.1 1.2
Corporate   12.2     18.6     46.2     57.1  
Total selling, general and administrative expenses $ 58.3   $ 71.1   $ 189.7   $ 215.0  
 
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:
Power $ (22.3 ) $ 23.2 $ (3.8 ) $ 31.7
Plant Services 19.7 14.6 58.5 49.0
E&I 31.4 28.8 68.4 77.2
F&M 14.6 6.0 47.6 21.5
E&C (33.0 ) (111.9 ) (26.1 )

 

(135.9 )
Investment in Westinghouse (32.6 ) (25.7 ) 23.2 (106.8 )
Corporate   (12.1 )   (64.6 )   (45.6 )   (98.7 )
Total income (loss) before income taxes and earnings (losses) from unconsolidated entities $ (34.3 ) $ (129.6 ) $ 122.2   $ (162.0 )

 
 
 
RECONCILIATION OF EBITDA TO INCOME (LOSS) BEFORE INCOME TAXES AND EARNINGS (LOSSES) FROM UNCONSOLIDATED ENTITIES
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2012 AND 2011
(in millions)
                             
Three Months Ended May 31, 2012
Consolidated     Power     Plant Services     E&I     F&M     E&C     Westinghouse     Corporate
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:   $ (34.3 )     $ (22.3 )     $ 19.7     $ 31.4       $ 14.6       $ (33.0 )     $ (32.6 )     $ (12.1 )
Interest expense 11.7 0.1 - - - - 9.8 1.8
Depreciation and amortization 18.4 6.8 0.5 3.4 4.9 2.3 - 0.5
Earnings (losses) from unconsolidated subs 16.5 0.1 - 0.1 - 0.1 16.2 -
Income attributable to noncontrolling interests     (4.0 )       -         -       (3.0 )       (1.0 )       -         -         -  
EBITDA   $ 8.3       $ (15.3 )     $ 20.2     $ 31.9       $ 18.5       $ (30.6 )     $ (6.6 )     $ (9.8 )
 
Three Months Ended May 31, 2011
Consolidated     Power     Plant Services     E&I     F&M     E&C     Westinghouse     Corporate
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:   $ (129.6 )     $ 23.2       $ 14.6     $ 28.8       $ 6.0       $ (111.9 )     $ (25.7 )     $ (64.6 )
Interest expense 11.8 0.3 - - - - 10.3 1.2
Depreciation and amortization 18.4 6.8 0.4 3.6 4.3 2.6 - 0.7
Earnings (losses) from unconsolidated subs 23.0 - - 0.5 - - 22.5 -
Income attributable to noncontrolling interests     (2.4 )       -         -       (3.3 )       0.9         -         -         -  
EBITDA   $ (78.8 )     $ 30.3       $ 15.0     $ 29.6       $ 11.2       $ (109.3 )     $ 7.1       $ (62.7 )
 
Nine Months Ended May 31, 2012
Consolidated     Power     Plant Services     E&I     F&M     E&C     Westinghouse     Corporate
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:   $ 122.2       $ (3.8 )     $ 58.5     $ 68.4       $ 47.6       $ (26.1 )     $ 23.2       $ (45.6 )
Interest expense 35.3 0.2 - - 0.1 - 30.5 4.5
Depreciation and amortization 55.4 20.6 1.4 10.2 14.2 7.3 - 1.7
Earnings (losses) from unconsolidated subs 26.1 0.1 - 1.0 - 6.0 19.0 -
Income attributable to noncontrolling interests     (6.2 )       -         -       (5.5 )       (0.7 )       -         -         -  
EBITDA   $ 232.8       $ 17.1       $ 59.9     $ 74.1       $ 61.2       $ (12.8 )     $ 72.7       $ (39.4 )
 
Nine Months Ended May 31, 2011
Consolidated     Power     Plant Services     E&I     F&M     E&C     Westinghouse     Corporate
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:   $ (162.0 )     $ 31.7       $ 49.0     $ 77.2       $ 21.5       $ (135.9 )     $ (106.8 )     $ (98.7 )
Interest expense 35.3 0.5 - - - - 31.2 3.6
Depreciation and amortization 55.0 20.7 1.3 10.3 13.0 7.7 - 2.0
Earnings (losses) from unconsolidated subs 33.6 0.6 - 1.2 - 2.4 29.4 -
Income attributable to noncontrolling interests     (4.1 )       -         -       (5.9 )       1.8         -         -         -  
EBITDA   $ (42.2 )     $ 53.5       $ 50.3     $ 82.8       $ 36.3       $ (125.8 )     $ (46.2 )     $ (93.1 )

 
 
 

REGULATION G DISCLOSURES

The Shaw Group Inc. believes it is important that we discuss our operating results excluding the Investment in Westinghouse segment. We acquired a 20 percent interest in Westinghouse in October 2006. We have classified the Investment in Westinghouse as a separate operating segment. The majority of the activity related to this segment will be recorded below the operating income line. During the quarter, we have recorded interest expense, as well as other significant non-cash charges related to the investment. We believe that presenting our financial results excluding the Investment in Westinghouse segment is important to investors and management to demonstrate the profitability of our other segments, as well as to point out certain non-cash charges related to this investment.
         
 
THE SHAW GROUP INC.
RECONCILIATION OF SHAW CONSOLIDATED RESULTS TO SHAW EXCLUDING INVESTMENT IN WESTINGHOUSE SEGMENT
FOR THE THREE MONTHS ENDED MAY 31, 2012  
(in millions, except per share data) Q-3 FY 2012
Three months ended May 31, 2012
Westinghouse Excluding
Consolidated Segment Westinghouse
 
Revenues $ 1,560.8 $ - $ 1,560.8
Cost of revenues   1,504.3     -     1,504.3  
Gross profit 56.5 - 56.5
 
Selling, general and administrative expenses   58.3     (0.0 )   58.3  
 
Operating income (loss) (1.8 ) 0.0 (1.8 )
 
Interest expense (1.9 ) - (1.9 )
Interest expense on Japanese yen-denominated bonds, including accretion and amortization (9.8 ) (9.8 ) -
Interest income 1.4 - 1.4
Foreign currency translation gains (losses) on Japanese yen-denominated bonds, net (22.8 ) (22.8 ) -
Other foreign currency transaction gains (losses), net 0.6 - 0.6
Other income (expense), net   0.0     (0.0 )   0.0  
 
Income (loss) before income taxes and earnings from unconsolidated entities (34.3 ) (32.6 ) (1.7 )
Provision (benefit) for income taxes   (12.1 )   (12.6 )   0.5  
 
Income (loss) before earnings from unconsolidated entities (22.2 ) (20.0 ) (2.2 )
 
Income from 20% Investment in Westinghouse, net of income taxes 10.0 10.0 -
Earnings (losses) from unconsolidated entities, net of income taxes 0.2 - 0.2
     
Net income (loss)   (12.0 )   (10.0 )   (2.0 )
 
Less: Noncontrolling interests in income of consolidated subsidiaries   4.0     -     4.0  
 
Net income (loss) attributable to Shaw $ (16.0 ) $ (10.0 ) $ (6.0 )
 
Net income (loss) attributable to Shaw per common share:
Basic $ (0.24 ) $ (0.15 ) $ (0.09 )
Diluted $ (0.24 ) $ (0.15 ) $ (0.09 )
 
Weighted average shares outstanding:
Basic 65.9 65.9 65.9
Diluted 65.9 65.9 65.9

 
 
 

REGULATION G DISCLOSURES

The Shaw Group Inc. believes it is important that we discuss our operating results excluding the Investment in Westinghouse segment. We acquired a 20 percent interest in Westinghouse in October 2006. We have classified the Investment in Westinghouse as a separate operating segment. The majority of the activity related to this segment will be recorded below the operating income line. During the quarter, we have recorded interest expense, as well as other significant non-cash charges related to the investment. We believe that presenting our financial results excluding the Investment in Westinghouse segment is important to investors and management to demonstrate the profitability of our other segments, as well as to point out certain non-cash charges related to this investment.

 
 
    THE SHAW GROUP INC.
RECONCILIATION OF SHAW CONSOLIDATED RESULTS TO SHAW EXCLUDING INVESTMENT IN WESTINGHOUSE SEGMENT
FOR THE THREE MONTHS ENDED MAY 31, 2011    
(in millions, except per share data) Q-3 FY 2011
Three months ended May 31, 2011
  Westinghouse   Excluding
Consolidated Segment Westinghouse
 
Revenues $ 1,490.0 $ - $ 1,490.0
Cost of revenues   1,479.9     -     1,479.9  
Gross profit 10.1 - 10.1
 
Selling, general and administrative expenses 71.1 0.4 70.7
Impairment of notes receivable   48.1       -       48.1  
 
Operating income (loss) (109.1 ) (0.4 ) (108.7 )
 
Interest expense (1.5 ) - (1.5 )
Interest expense on Japanese yen-denominated bonds, including accretion and amortization (10.3 ) (10.3 ) -
Interest income 2.1 - 2.1
Foreign currency translation gains (losses) on Japanese yen-denominated bonds, net (15.0 ) (15.0 ) -
Other foreign currency transaction gains (losses), net 2.5 - 2.5
Other income (expense), net   1.7     -     1.7  
 
Income (loss) before income taxes and earnings from unconsolidated entities (129.6 ) (25.7 ) (103.9 )
Provision (benefit) for income taxes   (48.1 )   (10.0 )   (38.1 )
 
Income (loss) before earnings from unconsolidated entities (81.5 ) (15.7 ) (65.8 )
 
Income from 20% Investment in Westinghouse, net of income taxes 13.7 13.7 -
Earnings (losses) from unconsolidated entities, net of income taxes 0.2 - 0.2
     
Net income (loss)   (67.6 )   (2.0 )   (65.6 )
 
Less: Noncontrolling interests in income of consolidated subsidiaries   2.4     0.2     2.2  
 
Net income (loss) attributable to Shaw $ (70.0 ) $ (2.2 ) $ (67.8 )
 
Net income (loss) attributable to Shaw per common share:
Basic $ (0.89 ) $ (0.03 ) $ (0.86 )
Diluted $ (0.89 ) $ (0.03 ) $ (0.86 )
 
Weighted average shares outstanding:
Basic 78.7 78.7 78.7
Diluted 78.7 78.7 78.7

 
 
 

REGULATION G DISCLOSURES

The Shaw Group Inc. defines EBITDA as earnings before interest expense, income taxes, depreciation and amortization. EBITDA is an important financial measure used by The Shaw Group Inc. to assess performance. Although it is calculated using components derived from our GAAP financial statements, EBITDA itself is not a GAAP measure. The following table reflects the company's calculation of EBITDA and EBITDA percentage. Calculations of EBITDA should not be viewed as a substitute for calculations under GAAP, including cash flow from operations, operating income and net income. In addition, EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company.

         
 
RECONCILIATION OF EBITDA CALCULATION FOR THE THREE MONTHS ENDED MAY 31, 2012
 
Q-3 FY 2012
     

(in millions)

Consolidated

Westinghouse

Segment

Excluding

Westinghouse

 

 
Net income (loss) attributable to Shaw $ (16.0 ) $ (10.0 ) $ (6.0 )
Interest expense 11.7 9.8 1.9
Depreciation and amortization 18.4 - 18.4
Provision for income taxes (12.1 ) (12.6 ) 0.5
Income taxes on unconsolidated subs   6.3       6.2       0.1  
EBITDA $ 8.3     $ (6.6 )   $ 14.9  
 
 
RECONCILIATION OF EBITDA CALCULATION FOR THE THREE MONTHS ENDED MAY 31, 2011
 
Q-3 FY 2011
     

(in millions)

Consolidated

Westinghouse

Segment

Excluding

Westinghouse

 

 
Net income (loss) attributable to Shaw $ (70.0 ) $ (2.2 ) $ (67.8 )
Interest expense 11.8 10.3 1.5
Depreciation and amortization 18.4 - 18.4
Provision for income taxes (48.1 ) (10.0 ) (38.1 )
Income taxes on unconsolidated subs   9.1       9.0       0.1  
EBITDA $ (78.8 )   $ 7.1     $ (85.9 )

 
 
 

REGULATION G DISCLOSURES

The Shaw Group Inc. defines total adjusted cash as the sum of cash and cash equivalents, restricted and escrowed cash and cash equivalents, short-term investments and restricted short-term investments. These accounts include the amount of cash that can be accessed in a matter of days.

     
 
 
 
RECONCILIATION OF TOTAL ADJUSTED CASH AS OF MAY 31, 2012
 

(in thousands)

Q-3 FY 2012

 

 
Cash and cash equivalents $ 426,961
Restricted and escrowed cash and cash equivalents 42,729
Short-term investments 122,014
Restricted short-term investments   242,999
Total Adjusted Cash $ 834,703
 
RECONCILIATION OF TOTAL ADJUSTED CASH AS OF MAY 31, 2011
 

(in thousands)

Q-3 FY 2011

 

 
Cash and cash equivalents $ 382,372
Restricted and escrowed cash and cash equivalents 77,336
Short-term investments 326,571
Restricted short-term investments   277,283
Total Adjusted Cash $ 1,063,562
 
 

Media and Financial Contact:
The Shaw Group Inc.
Gentry Brann, 225-987-7372
gentry.brann@shawgrp.com