Washington Group International Reports First Quarter 2002 Results; Company Files Annual Reports for Fiscal 2000 and 2001 With the Securities and Exchange Commission

Business Wire, July 9, 2002

Business Editors

Company to Hold Investor Conference Call on Thursday, July 11

At 4:30 p.m. (EDT) to Discuss First Quarter Financial Results

Washington Group International, Inc. (OTC: WGII.PK) today announced financial results for the first quarter ended March 29, 2002.

The company reported strong performance in revenues, gross profit, EBITDA (earnings, excluding normal profit, before interest, taxes, depreciation and amortization), and net income that were in line with preliminary results reported on May 15, 2002. In addition, Washington Group reported significant new work booked in the quarter.

"Results for the quarter are a tribute to our employees. Our customers are extending contracts and expanding scope under contracts because they like the high quality work done by our people. This clearly demonstrates the strength of our operations," said Stephen G. Hanks, Washington Group president and chief executive officer. "We used the financial reorganization as our opportunity to strengthen our balance sheet and realign our business units to operate leaner and more profitably. We are well positioned as a financially strong industry leader to capture profitable opportunities in the fastest-growing markets."

Washington Group also reported that, on Wednesday, July 10, 2002, it will file annual reports with the Securities and Exchange Commission (SEC) on Form 10-K for fiscal years 2000 and 2001 and its quarterly report on Form10-Q for the first quarter ended March 29, 2002. Filing these reports was delayed because of the complexities involved in accounting for and reporting on the Raytheon Engineers & Constructors acquisition and Washington Group's resulting financial reorganization.

First Quarter 2002 Performance

As previously reported, Washington Group successfully emerged from bankruptcy protection as a reorganized, financially healthy company on January 25, 2002 and began reporting as a new entity effective February 1, 2002. Generally accepted accounting principles (GAAP) require Washington Group to report, in the first quarter of fiscal year 2002 and thereafter, its results for the reorganized entity separately from those of the company as it existed prior to the reorganization. Accordingly, the company's first quarter 10-Q will include pre-reorganization financial information for the one month ended February 1, 2002 and post-reorganization financial information for the two months ended March 29, 2002.

Washington Group's first quarter 2002 financial results presented in this news release are pro forma in nature. They combine the results of operations of the newly reorganized company for the two months ended March 29, 2002 with the pre-reorganization results for the month ended February 1, 2002.

In addition, the pro forma first quarter results are adjusted to exclude the following items:

-- Pursuant to the settlement agreement with Raytheon Corporation, and at Raytheon's request, the company is completing work on certain power plant projects on a cost reimbursable plus fee basis. New work bookings and revenue on these projects is significant in 2002 and the fee generated is at a relatively low margin.

-- Gross profit includes approximately $30 million of normal profit most of which relates to projects acquired from Raytheon in 2000 that are expected to be finished by year-end. All previous guidance for gross profit also included normal profit of approximately $30 million. Normal profit has been excluded from the calculation of EBITDA.

-- The increase in new work for the Power business unit will be offset by lower than expected new work bookings in the Infrastructure and Industrial Process business units where new opportunities have been slower to materialize than originally anticipated.

-- The results of operations of two businesses being held for sale are now included in the projections up through the anticipated sale date. New work of $125 million, revenue of $145 million, and net income of $4 million are included. Because the company expects the sales will take place before year-end, amounts related to these businesses are not included in ending backlog.

-- The company believes net income in the last half of 2002 will be lower than the first half reflecting a lack of significant new work bookings for the Power and Infrastructure business units while the company was in bankruptcy and long lead times for booking new work within these business units, combined with the winding down of projects in both business units. Also, as fixed price projects are booked and work commences, profit recognition does not commence until the work is approximately 20 percent complete.

A reconciliation from the results reported under GAAP to the pro forma summary results included in this news release is provided in the accompanying financial highlights. Because of the company's reorganization, comparisons to the prior year are not meaningful and therefore have been omitted.

On a pro forma basis, Washington Group reported revenues of $963.6 million, gross profit of $45.7 million, net income of $12.9 million, and EBITDA of $35.4 million in the first quarter ended March 29, 2002. During the quarter, the company recognized a $2.8 million ($1.6 million after tax) gain relating to the demutualization of an insurance provider. Washington Group's stockholders' equity totaled $560 million at March 29, 2002. A presentation of earnings per share on a pro forma basis is not meaningful due to the reorganization and resulting change in capital structure upon emergence from bankruptcy.