KHDH Khd Humboldt Wedag International Ltd. (MM)

- Exceeds initial EBT guidance by 29% and backlog increases 71% - HONG KONG, April 2 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") (NASDAQ:KHDH) today announced results for the year ended December 31, 2006. All figures are in US dollars and earnings per share amounts are on a diluted basis. We are reporting our financial statements on the basis of reclassifying our prior financial service business as discontinued operations for the years 2006, 2005 and 2004. For the full year ended December 31, 2006, KHD reported revenues from continuing operations of $393.5 million, with income (or earnings) before taxes from continuing operations ("EBT") of $45.4 million and income from continuing operations of $31.8 million, or $2.10 per share. By comparison, 2005's revenues were $329.4 million for the same operations, with EBT of $30.9 million and with income from continuing operations of $23.8 million or $1.74 per share. For 2004, revenues were $155.7 million for the same operations, with EBT of $12.6 million and income from continuing operations of $10.6 million or $0.78 per share. The number of shares issued and outstanding as at December 31, 2006 was 14,733,191; the weighted average number of shares for the year ended December 31, 2006 was 15,207,726 on a diluted basis. The difference is primarily due to restructuring and stock options granted to our operating employees in 2006. To help our investors better understand the fluctuations of the business of KHD, we are providing the following forecast of the revenues and EBT for the full year 2007. For the year 2007, we expect revenues to increase to $623 million and EBT for the year of $61 million. Revenues and EBT are not evenly spread among all quarters; for this reason we are only giving guidance for the full year. The forecast (guidance) information and other statements in this release are forward-looking and are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially. See the section entitled "Disclaimer for Forward Looking Information" at the end of this release for a description of those risks and uncertainties. Accounting standards require our consolidated results to be converted to Canadian dollars using a weighted exchange rate. For this release we have converted our Canadian dollars results to US dollars using a year-end exchange rate. Consequently, the results are influenced by fluctuating international exchange rates. As KHD conducts an immaterial amount of its business in Canadian dollars, we believe it is in the best interest of those evaluating our results to eliminate this variable, and therefore, for comparative purposes, the following amounts for order intake and backlog were translated directly from Euros to US dollars at 1.3196, the exchange rate prevailing on December 31, 2006 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 year ended December 31, 2006 was $676.8 million, an increase of 55 percent over 2005 and an increase of 117 percent over 2004, with 30 percent of 2006 order intake came from the emerging Asia/Pacific region, 30 percent from Russia and Eastern Europe, 23 percent from the Americas and 8 percent from the Middle East. Order backlog as of December 31, 2006 was $603.2 million, up 71 percent over December 31, 2005 and an increase of 139 percent over 2004. EBT for 2006 totaled $45.4 million, an increase of 47 percent over 2005 and 260 per cent over 2004 percent. EBT exceeded our initial EBT guidance by 29 percent. Our corporate tax expense for reporting purposes was $7.2 million (16 percent) in 2006, $1.8 million (6 percent) in 2005. These numbers primarily reflected the net draw-down of our deferred tax asset, while the actual cash tax payment was $768,000 in 2006 and $1.1 million in 2005. Our minority interest expense was $6.4 million, or $0.42 per share. We have now entered into an agreement to acquire Sasamat Capital Corporation, the primary owner of this minority interest. See our separate news release issued on March 29, 2007. Commencing with our reporting of first quarter 2007 results, we intend to change our reporting currency to US dollars. CEO Jim Busche commented, "We are pleased that the trend of increasing orders intake, backlog and earnings established over the past few years has continued in 2006. Our presence and abilities in Russia, India and the United States advanced considerably during the year. We anticipate these trends to continue in 2007." We are also pleased to announce that we intend to distribute to our shareholders 90 percent of the shares of our wholly owned subsidiary, SWA REIT Ltd. ("SWA"), which owns and operates all of the real estate assets of KHD. Upon receipt of the necessary approvals, KHD shareholders will receive one share of SWA common stock for each KHD common share held. It is anticipated that there will be no tax cost to United States shareholders as a result of the distribution and there will be no tax effect on either KHD or SWA. SWA intends to focus exclusively on the growth and development of its real estate and will be seeking a stock exchange listing for its shares. Commenting, KHD Chairman, Michael Smith, said, "We are pleased to announce the distribution of our real estate assets to our shareholders. With this distribution, KHD will have completed the divestiture of legacy assets, which will allow management to focus on the growth of our industrial plant engineering and equipment supply business with technologies for cement production and coal and minerals processing, while giving the benefits and potential upside of our real estate assets to our shareholders. We analyzed alternatives to create shareholder value with this asset and believe that with the new real estate investment trust laws now emerging in Germany, the United Kingdom and other European countries, make this the most efficient means of enhancing the potential for generating the greatest value. The intrinsic value of the shares may grow in the market, especially with SWA's very low debt. SWA owns approximately 777 acres of land with buildings forming an industrial development area in the City of Arneburg, just west of Berlin in the State of Sachsen-Anhalt, Germany, and also owns approximately 27 acres of land with buildings in the city of Dessau in the State of Sachsen-Anhalt. Approximately 90 percent of the space is currently under lease to various tenants. The net book value of SWA is approximately US$46 million, which equals approximately US$2.81 per share for each KHD share, and has approximately US$3 million in total debt. The comparable, real estate companies in Europe trade at a price of 2.45 times their net book value." In order to be entitled to receive shares of SWA in the distribution, a shareholder must own KHD shares at the close of business on the record date, which will be announced shortly. This arrangement requires court approval under the Canada Business Corporation Act and approval by our shareholders, together with various conditions customary for transactions of this type. SWA and KHD will apply to the Supreme Court of British Columbia to obtain an interim order providing, among other things, for the calling and holding of the special meeting of shareholders of KHD. This arrangement is to be approved by two-thirds of the votes cast by KHD shareholders. KHD expects to hold its special general meeting on June 14, 2007. Further information concerning the arrangement will be available in the KHD circular to be filed on SEDAR at http://www.sedar.com/. Chairman Michael Smith commented further, "We ended the year with $205 million in cash and cash equivalents, $440 million in current assets, and equity at $273 million. With the distribution of our real estate assets, KHD may now be viewed as a true industrial plant engineering and equipment supply company. We encourage our shareholders to read the entire Form 20F report for a greater understanding of our company, which will available on our website." 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 not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in, the statements. 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 expressed or implied by the forward-looking statements, including, but not limited to: (1) a downturn in general economic conditions in Asia, Europe, the United States and internationally, (2) a decreased demand for the Company's products, (3) a decrease in the demand for cement, business prospects and opportunities. Forward-looking statements consist of statements that are minerals and related products, (4) the number of competitors with competitively priced products and services, (5) product development or other initiatives by the Company's 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, 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, and (13) other factors beyond the Company's control. Additional information about these and other assumptions, risks and uncertainties are set out in the "Risks and Uncertainties" section in our Form 20F filed with the Securities and Exchange Commission and our MD&A filed with Canadian security regulators. Contact Information: Allen & Caron Inc. Rene Randall Joseph Allen (investors) KHD Humboldt Wedag International Ltd. 1 (212) 691-8087 1 (604) 683-8286 or Len Hall (media) 1 (949) 474-4300 All figures are in US dollars and earnings per share amounts are on a diluted basis. The consolidated balance sheet and income statement for December 31, 2006 were translated from Canadian dollars into US dollars at US dollar 1 = Canadian dollars 1.1653 (equivalent to Euro 1 = US dollars 1.3196) KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS December 31, 2006 and 2005 (unaudited) (amounts in U.S. dollars; in thousands) ASSETS 2006 2005 Current assets Cash and cash equivalents $204,678 $94,667 Restricted cash 16,180 21,500 Securities 4,111 2,143 Loans 0 2,137 Accounts receivable, trade 68,432 34,588 Other receivables 33,901 18,298 Inventories 88,127 36,571 Contract deposits, prepaid and other 24,069 10,872 Future income tax assets 763 6,962 Current assets of discontinued operations 0 168,587 440,261 396,325 Non-current assets Securities 555 726 Loans and receivables 8,878 5,850 Real estate held for sale 47,894 26,750 Property, plant and equipment 2,993 10,190 Investment in resource property 29,037 30,312 Equity method investments 500 993 Future income tax assets 33,826 11,944 Investment in preferred shares of a former subsidiary 77,976 0 Non-current assets of discontinued operations 0 39,964 201,659 126,729 $641,920 $523,054 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS (con't) December 31, 2006 and 2005 (unaudited) (amounts in U.S. dollars; in thousands) LIABILITIES 2006 2005 Current liabilities Accounts payable and accrued expenses $242,574 $128,656 Notes payable 542 2,944 Long-term debt, current portion 4,596 1,406 Pension liabilities 1,664 1,489 Provision for warranty costs 21,868 20,527 Future income tax liability 0 245 Current liabilities of discontinued operations 0 58,447 271,244 213,714 Long-term liabilities Long-term debt, less current portion 13,772 5,119 Pension liabilities 28,559 25,584 Provision for warranty costs 7,247 4,427 Deferred credit, future income tax assets 15,539 0 Future income tax liability 9,180 10,154 Other long-term liabilities 625 230 Long-term liabilities of discontinued operations 0 1,479 74,922 46,993 Total liabilities 346,166 260,707 Minority interests 22,466 18,088 SHAREHOLDERS' EQUITY Common stock 120,670 84,470 Treasury stock (65,759) (21,989) Contributed surplus 2,039 0 Equity component of convertible debt 0 125 Retained earnings 216,579 209,416 Cumulative translation adjustment (241) (27,763) 273,288 244,259 $641,920 $523,054 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31, 2006, 2005 and 2004 (unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2006 2005 2004 Revenues $393,499 $329,402 $155,731 Cost of revenues 332,110 285,009 130,240 Gross profit 61,389 44,393 25,491 Other operating income Resource property 5,855 4,472 4,482 Real estate property 1,907 5,521 3,809 7,762 9,993 8,291 General and administrative expense (30,265) (27,662) (21,210) Stock-based compensation - general and administrative (2,039) 0 0 Operating income 36,847 26,724 12,572 Interest, net 2,986 (1,159) (1,063) Other income, net 5,589 5,339 1,111 Income before income taxes from continuing operations 45,422 30,904 12,620 Recovery of (provision for) income taxes (7,183) (1,788) 2,875 Income before minority interests 38,239 29,116 15,495 Minority interests (6,407) (5,307) (4,882) Income from continuing operations 31,832 23,809 10,613 Income (loss) from discontinued operations, net of tax (1,390) 5,523 20,088 Net income $30,442 $29,332 $30,701 Basic earnings (loss) per share from continuing operations $2.11 $1.75 $ 0.78 from discontinued operations (0.09) 0.41 1.48 $2.02 $2.16 $ 2.26 Diluted earnings (loss) per share from continuing operations $2.10 $1.74 $0.78 from discontinued operations (0.09) 0.40 1.48 $2.01 $2.14 $2.26 Weighted average shares outstanding - basic 15,081,206 13,609,348 13,520,221 Weighted average shares outstanding - diluted 15,207,726 13,754,693 13,520,221 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of December 31, 2006 (unaudited) (amounts in U.S. dollars; in thousands, except per share data and ratios) Cash and cash equivalents $204,678 Short-term securities 4,111 Working capital 169,017 Total assets 641,920 Shareholders' equity 273,288 Book value per share 18.55 Current ratio 1.623 Long-term debt to equity ratio 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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