Shaw Reports Record Fiscal Year 2008 Financial Results

The Shaw Group Inc. (NYSE: SGR) today reported record financial results for the fiscal year ended August 31, 2008. Net income was $140.7 million, or $1.67 per diluted share, compared to a loss of $19.0 million, or $0.24 per diluted share, in 2007. Fiscal year 2008 net income excluding the Westinghouse segment was a record $191.4 million, or $2.27 per diluted share, compared to $19.4 million, or $0.24 per diluted share, in fiscal year 2007.

EBITDA for fiscal year 2008 was $316.6 million and fiscal year 2008 EBITDA excluding the Westinghouse segment was a record $362.5 million. These amounts compare to EBITDA for fiscal year 2007 of $59.6 million and fiscal year 2007 EBITDA excluding the Westinghouse segment of $92.1 million. Cash flow from operations for the year was a record $623.9 million compared to $461.0 million in fiscal year 2007. Shaw’s consolidated cash balance at August 31, 2008, was a record $936.7 million, or $11.08 per diluted share, up from $360.6 million, or $4.34 per diluted share, at August 31, 2007.

The results of the Westinghouse segment continue to experience significant volatility from non-cash foreign exchange translation losses resulting from increases in the value of the Japanese Yen versus the U.S. dollar. Translation losses amounted to $69.7 million pre-tax, or $42.4 million after-tax, in fiscal year 2008 and $33.2 million pre-tax, or $20.2 million after-tax, in fiscal year 2007.

Revenues in fiscal year 2008 increased 22 percent to a record $7.0 billion from 2007, and new awards totaled $8.3 billion driven by large contracts within the fossil & nuclear and environmental & infrastructure segments. The company’s backlog of unfilled orders at year-end increased 9 percent to $15.6 billion from $14.3 billion at August 31, 2007. The backlog excludes the majority of work expected to be performed under contracts with Georgia Power Company, South Carolina Electric & Gas Company and Progress Energy Florida, Inc. for a total of six new Westinghouse AP1000™ nuclear reactors, as Shaw continues to operate under limited notices to proceed for these projects. Approximately $5.7 billion, or 37 percent, of the current backlog is expected to be converted to revenues during the next 12 months.

J.M. Bernhard Jr., chairman, president and chief executive officer of Shaw, said, "Shaw performed well in 2008, and our operating segments had significantly better results than in 2007. We were ranked "#1 in Power” by ENR magazine during the year, and we continued to grow our business. While the current economic environment is uncertain, we remain positive about our future because of the strength of the clients and the markets we serve. We enter fiscal year 2009 with a very strong backlog of unfilled orders, the majority of which are with regulated electric utilities, national and international oil companies, and the U.S. government. Additionally, new nuclear power plant projects, for which we signed contracts in 2008, but we have not yet included in backlog, continue to progress with the state regulatory authorities and the NRC. We continue to forecast release of major portions of the nuclear work in 2009.”

Fourth Quarter Fiscal Year 2008 Results and the Restatement of Prior Quarters’ Results

While preparing the fourth quarter fiscal year 2008 financial results, we identified additional costs on a major power project in our fossil & nuclear segment that required a $59.2 million pre-tax, or $36.1 after-tax, reduction in accrued contract profit. Included in this amount were charges that should have been recorded in the second and third quarters of fiscal year 2008. These and other accumulated errors were corrected by recording a $8.2 million pre-tax charge, $4.9 million after-tax or $0.06 per diluted share, for the three months ended February 29, 2008, and a $3.1 million pre-tax charge, $2.0 million after-tax or $0.02 per diluted share, for the three months ended May 31, 2008. Our 2008 Annual Report on Form 10-K, to be filed with the Securities and Exchange Commission later today, reflects these corrections. We also have filed a Form 8-K with the Commission with respect to this issue.

After correction of the above errors, net income for the fourth quarter of fiscal year 2008 was $82.6 million, or $0.98 per diluted share, compared with $0.6 million, or $0.01 per diluted share, in fiscal year 2007. Excluding the Westinghouse segment, fourth quarter fiscal year 2008 net income was $64.7 million, or $0.77 per diluted share, compared with $36.9 million, or $0.44 per diluted share, in the fourth quarter of fiscal year 2007. The fourth quarter fiscal year 2008 results include a non-cash foreign exchange translation gain in the Westinghouse segment of $36.5 million pre-tax, or $22.2 million after-tax.

EBITDA for the fourth quarter of fiscal year 2008 was $140.3 million, and fourth quarter fiscal year 2008 EBITDA excluding the Westinghouse segment was $100.0 million. These amounts compare to EBITDA for fourth quarter of fiscal year 2007 of $13.4 million and fourth quarter fiscal year 2007 EBITDA excluding the Westinghouse segment of $64.2 million. Operating cash flow during the fourth quarter was a record $285.6 million versus $176.8 in the prior year period.

A conference call to discuss the company’s fourth quarter and fiscal year 2008 financial results will be held today, Thursday, October 30, 2008, at 9 a.m. EDT (8 a.m. CDT). A slide presentation will be posted on the Investor Relations page of Shaw's Web site at www.shawgrp.com approximately one hour prior to the conference call. Interested parties may dial 800-736-7549 to listen live to the conference call or access a live audio webcast on the Investor Relations page of Shaw's Web site at www.shawgrp.com.

A replay of the conference call will be available by telephone, as well as on the company’s Web site, approximately one hour after the conclusion of the call. To listen to a replay of the conference call by telephone, dial 800-633-8284 and use reservation number 2139-7442.

Calculation of EBITDA

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 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. In addition, EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company.

The Shaw Group Inc. is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the energy, chemicals, environmental, infrastructure and emergency response markets. A Fortune 500 company with fiscal year 2008 annual revenues of $7 billion, Shaw is headquartered in Baton Rouge, La., and employs approximately 26,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. Shaw is the power sector industry leader according to Engineering News-Record's list of Top 500 Design Firms. For further information, please visit Shaw's Web site at www.shawgrp.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor” for certain forward-looking statements. The statements contained herein that are not historical facts (including without limitation statements to the effect that the Company or its management "believes,” "expects,” "anticipates,” "plans” or other similar expressions) and statements related to revenues, earnings, backlog, or other financial information or results are forward-looking statements based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions and are subject to change based upon various factors. Should one or more of such risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A description of some of the risks and uncertainties that could cause actual results to differ materially from such forward-looking statements can be found in the Company’s reports and registration statements filed with the Securities and Exchange Commission, including its Form 10-K and Form 10-Q reports, and on the Company's Web site under the heading "Forward-Looking Statements.” These documents are also available from the Securities and Exchange Commission or from the Investor Relations department of Shaw. For more information on the Company and announcements it makes from time to time on a regional basis, visit our Web site at www.shawgrp.com.