SNC-Lavalin announces a drop in 2011 income

Following is the text of a press release from SNC-Lavalin.

SNC-Lavalin Group has announced today that its 2011 net income is expected to be approximately 18% (or approximately $80 million) below its previously announced 2011 outlook. Of this amount, the following items are expected to be recorded in the fourth quarter of 2011:

• A loss of approximately $23 million from a revised position of the Company’s net financial exposure on its Libyan projects;
• Unfavourable cost reforecasts on certain projects in its Infrastructure and Environment and Chemicals and Petroleum segments; and
• Period expenses of approximately $35 million relating to certain payments made in the fourth quarter of 2011 that were documented to construction projects to which they did not relate and, consequently, had to be recorded as expenses in the quarter.

The Company’s Board of Directors initiated an independent investigation, led by its Audit Committee, of the facts and circumstances surrounding the $35 million of payments referred to above and certain other contracts. Independent legal counsel were retained in this connection. The investigation’s current findings support the Company’s accounting treatment of these payments. The Board of Directors is taking steps to implement changes and further appropriate actions arising from the investigation.

The Company is working with its external auditors and legal advisors to resolve all issues relating to the investigation to permit the auditors to deliver their audit report on a timely basis. The Company is working towards announcing and filing its 2011 fourth quarter and year-end financial results as soon as reasonably possible and in any event prior to March 30, 2012.

SNC-Lavalin has offices across Canada and in over 40 other countries around the world, and is currently working in some 100 countries.