KHDH Khd Humboldt Wedag International Ltd. (MM)

HONG KONG, April 3 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") (NASDAQ:KHDH) today reported its financial results for the twelve months and fourth quarter ended December 31, 2005. All figures are in US dollars and earnings per share amounts are on a fully diluted basis. For the year ended December 31, 2005, total revenues increased to $820.0 million from $579.7 million in the previous year. Revenues from our industrial and engineering services business increased to $341.8 million in 2005 from $165.4 million in 2004. Revenues from our financial services business, the majority of which was distributed to shareholders effective January 31, 2006, as part of Mass Financial Corp, were $478.2 million in 2005, versus $414.3 million in 2004. Net income for 2005 decreased to $29.3 million, or $2.14 per share on a diluted basis, from $30.7 million, or $2.24 per share on a diluted basis, in the prior year. Total expenses for the year increased to $782.1 million, compared to $547.8 million in the previous year. Gross profit margins for the industrial and engineering services business were 18.2 percent in 2005. Margins in the financial services segment, which is now part of Mass Financial Corp, were 9.9 percent in 2005. Income before taxes and minority interests for the year ended 2005 from our industrial and engineering business was $26.2 million or $1.90 per share on a diluted basis compared to $14.2 million or $1.03 per share on a diluted basis in 2004. The net income for the now separated financial services, Mass Financial Corp, was $4.0 million for 2005. Revenues for the fourth quarter ended December 31, 2005, increased to $202.5 million, compared to $171.6 million in the fourth quarter of 2004. Net income for the 2005 fourth quarter decreased to $4.9 million, or $0.36 per share, compared to $6.3 million, or $0.46 per share in the same quarter last year. Total expenses for the fourth quarter of 2005 increased to $195.8 million, compared to $165.9 million in the same quarter last year. The industrial and engineering services segment revenues for the fourth quarter increased to $107.4 million from $53.1 million the prior year; for the financial services segment, fourth quarter revenues decreased to $95.1 million from $118.4 million for the year-earlier period. Order Intake in the industrial and engineering services segment for the year 2005 increased to $394.3 million compared to $280.6 million in 2004. Backlog Orders for the industrial and engineering services business increased to $318.4 million at the close of the fourth quarter of 2005, compared to $225.0 million at the same time in 2004. There are several noteworthy characteristics of the Order Intake and Backlog. All of the orders in 2005 demonstrate the Company's strategic policy of minimizing risk by focusing on core business, i.e., equipment design and supply contracts, as opposed to turn-key contracts. Furthermore, the geographic origin of the orders is also significant. The geographic breakdown of 2005 Order Intake may be summarized as 43 percent from Asia; 32 percent from the Middle East; 19 percent from the Americas and the balance primarily from Russia and Europe. Order Intake is defined as the total of all orders received during the respective period, while Order Backlog is defined as the amount of orders received but not yet fulfilled (for easy comparison, all amounts were translated from euro to $ at 1.1841, the exchange rate prevailing on December 31, 2005). In January 2006, we distributed substantially all of the non-industrial assets to our shareholders by means of a non-taxable distribution of Mass Financial Corp common shares. This will allow KHD to focus on its industrial engineering business, while Mass Financial focuses exclusively on the growth and development of the financial services business. Commenting, Michael Smith, Chairman of KHD Humboldt Wedag International Ltd., said "In 2005, we began the transition of KHD from a multi-segment financial services company to two separate entities: a global industrial plant engineering company, and the now separated financial services company. We believe that as a pure industrial plant engineering company, KHD will be able to achieve more attractive capital market multiples, based on our analysis of publicly traded companies in this peer group. KHD is a competitive, financially strong, global company well positioned for today's markets." Jim Busche, newly appointed President and CEO of KHD, commented, "The segments that we serve in natural resources and infrastructure materials -- ores, precious and semi-precious minerals and cement -- are growing very solidly and quickly in the developed and developing areas of the world. We are seeing this growth in North America and areas of Eastern Europe, Asia and South America. We believe that we have an extraordinary opportunity, an exceptional team of talented and experienced people, and an established presence in all important economies of the world. We intend to be the premier provider of industrial plant engineering equipment in our geographies, which are primarily Asia, the Americas, Eastern Europe and the Middle East." Mr. Smith added, "We have acceptable financial ratios at December 31, 2005. Our balance sheet had total assets of $523.1 million, shareholders' equity of $244.3 million, with cash and short-term securities totaling $210.6 million and working capital of $209.4 million with long-term debt of $6.3 million. We have strong liquidity, a three-fold increase in bonding capacity and substantial backlog of orders. Sustained effort focused on the further implementation of this strategy will be a high priority as we strive to achieve our goals. We encourage our shareholders to read our SEC Form 20-F filing, now available on our website, for a greater understanding of our industrial engineering prospects, as well as the distribution of the financial services business." About KHD Humboldt Wedag International Ltd. KHD Humboldt Wedag International Ltd. (the "Company") owns companies that operate internationally in the industrial plant engineering and equipment supply industry, and specializes in the cement, coal and mineral industries. To obtain further information on the Company, please visit our website at http://www.khdhumboldt.com/. Contact Information: Allen & Caron Inc Rene Randall Joseph Allen (investors) KHD Humboldt Wedag International Ltd (212) 691-8087 (604) 683-8286 or Len Hall (media) (949) 474-4300 Certain statements included herein are "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Forward- looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Factors that could cause actual results to differ materially from anticipated results in connection with management's belief that KHD Humboldt Wedag International Ltd.'s expansion into Asia and the Middle East will continue to see increasing opportunities for the Company include risks and uncertainties such as: general market conditions that may adversely impact revenue generated by the demand for the products and services of KHD Humboldt Wedag International Ltd; the number of competitors with competitively priced products and services; the uncertainty of government regulation and politics in Asia and the Middle East and other markets; product development or other initiatives of the KHD Humboldt Wedag International Ltd.'s competitors; and other risks and uncertainties detailed in the KHD Humboldt Wedag International Ltd.'s Form 20-F and other reports filed with the Securities and Exchange Commission. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS December 31, 2005 and 2004 (Unaudited) (amounts in U.S. dollars; in thousands) 2005 2004 ASSETS Current assets Cash and cash equivalents $194,313 $179,231 Restricted cash 22,016 13,706 Securities 16,265 17,542 Loans 10,638 8,156 Receivables, commodities transactions 10,450 27,384 Receivables, industrial and engineering services 34,588 26,129 Receivables 25,533 28,014 Commodity investments 24,356 21,415 Inventories 38,641 9,155 Real estate held for sale 27,479 35,663 Contract deposits, prepaid and other 11,201 18,128 Future income tax assets 7,594 6,664 423,074 391,187 Non-current assets Securities 7,893 8,190 Loans 9,436 14,165 Properties, plant and equipment 10,835 18,368 Resource property 30,312 29,363 Goodwill 12,987 16,987 Equity method investments 16,021 15,362 Future income tax assets 12,496 7,957 99,980 110,392 $523,054 $501,579 LIABILITIES Current liabilities Accounts payable and accrued expenses $159,628 $132,944 Notes payable, commodities transactions 9,890 6,397 Notes payable, industrial and engineering services 2,944 8,866 Long-term debt, current portion 1,606 6,790 Pension liabilities 1,489 1,557 Deposits 17,327 38,653 Provision for warranty costs 20,527 9,672 Future income tax liability 303 5,213 213,714 210,092 Long-term liabilities Long-term debt, less current portion 6,253 11,950 Pension liabilities 25,584 29,011 Provision for warranty costs 4,427 1,295 Future income tax liability 10,154 0 Other long-term liabilities 575 1,030 46,993 43,286 Total liabilities 260,707 253,378 Minority interests 18,088 24,352 SHAREHOLDERS' EQUITY Common stock 62,481 59,415 Equity component of convertible debt 125 121 Retained earnings 209,416 174,444 Cumulative translation adjustment (27,763) (10,131) 244,259 223,849 $523,054 $501,579 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31, 2005 and 2004 (Unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2005 2004 Revenue Financial services $478,201 $414,318 Industrial and engineering services 341,775 165,413 819,976 579,731 Expenses Financial services 430,992 358,047 Industrial and engineering services 279,637 131,546 General and administrative 63,691 52,037 Interest 7,776 6,184 782,096 547,814 Income before income taxes 37,880 31,917 Recovery of (Provision for) income taxes (2,710) 3,463 35,170 35,380 Minority interests (5,838) (4,679) Net income $29,332 $30,701 Earnings per share Basic $2.16 $2.27 Diluted $2.14 $2.24 Weighted average shares outstanding (000's) Basic 13,609 13,520 Diluted 13,755 13,818 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY December 31, 2005 and 2004 (Unaudited) (amounts in U.S. dollars; in thousands, except per share data and ratios) 2005 2004 Cash and cash equivalents $194,313 $179,231 Short-term securities 16,265 17,542 Working capital 209,360 181,095 Total assets 523,054 501,579 Long-term debt, less current portion 6,253 11,950 Shareholders' equity 244,259 223,849 Book value per share 17.91 16.49 Current ratio 1.98 1.86 Long-term debt to equity ratio 0.03 0.05 DATASOURCE: KHD Humboldt Wedag International Ltd. CONTACT: Rene Randall of KHD Humboldt Wedag International Ltd, +1-604-683-8286, ; or Investors - Joseph Allen, +1-212-691-8087, , or Media - Len Hall, +1-949-474-4300, , both of Allen & Caron Inc. for KHD Humboldt Wedag International Ltd Web site: http://www.khdhumboldt.com/

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