BOISE — Five years ago, when Washington Group International was emerging from its second bankruptcy filing in six years, it appeared the company's image would be severely tarnished.
Instead, the Boise-based engineering and construction giant appears to have rebounded.
"Washington Group financially is in as great a shape as I've ever seen them in all the years I've followed them," said John Rogers, an analyst with D.A. Davidson Co. in Portland, Ore., who has followed the company for 15 years.
Washington Group remains debt-free today. Earnings have increased an average of 16 percent a year, and company leaders say earnings for 2006 should be $75 million to $85 million when they are reported in March.
At the end of 2002, the company's stock was trading for just over $15 a share. Today, it's nearing $60.
The company has 24,000 employees worldwide working on projects as diverse as building mass transit systems in Los Angeles and destroying Cold War-era stockpiles of chemical weapons at military facilities across the United States.
"We have about $18 billion in work under way around the world in 40 states and 30 countries, and about $9 billion of work to go," President and CEO Steve Hanks told the Idaho Statesman for a recent article.
Rogers said the company has benefited from a strong economy and lucrative government contracts, which now make up 60 percent of its revenue. Larger competitors like Fluor and Bechtel have also reported strong revenues over the last few years.
For many, the bankruptcy proceeding is just history.
"On Wall Street, I think five years is an eternity," Rogers said. "But I think also that there is still a recognition that when things go bad, they can go really bad, and Washington Group is a prime example of that point."
Washington Group filed for bankruptcy protection for the second time on May 16, 2001. Hanks and other company leaders blamed the filing on an acquisition that brought with it significant undisclosed liabilities.
The company bought Raytheon Engineers and Constructors, the power unit of defense and aircraft giant Raytheon Co., for about $500 million.
The purchase gave Washington Group a significant position in the power and defense market, but it came with hidden costs. Of the 300-plus contracts acquired in the purchase, a dozen cost much more to complete than Raytheon had disclosed to Washington Group. Raytheon estimated their cost at less than $800 million. Washington Group later pegged them at $3 billion.
Washington Group sued Raytheon — a lawsuit later settled with no cash changing hands and neither company admitting any wrongdoing. But Raytheon was eventually required to pay $2.5 billion to complete the projects because of previous guarantees to project owners.
Former Washington Group shareholders also sued Raytheon for their losses. Raytheon settled that lawsuit in 2005 for $39 million without admitting any wrongdoing.
For shareholders, it was an all-too-familiar scenario.
The second bankruptcy was filed almost five years to the day after the company, then known as Morrison Knudsen, had filed its first bankruptcy relief action in 1996. The first bankruptcy came soon after the departure of chief executive Bill Agee, whose lavish lifestyle and risky ventures put the company deeply in the red.
When Washington Group emerged from its second bankruptcy proceeding on Jan. 25, 2002, investors had lost millions, and about 4,000 employees had lost their jobs.
Today, the tarnish of the bankruptcy appears to be gone, but Hanks concedes that shareholders who lost so much haven't forgotten. He said bankruptcy was a tough call but essential to save the company.
"What we have done and continue to do is to try and create a successful organization and one that succeeds long after I'm gone and the other leaders around here are gone," Hanks said. "You can have strong feelings about what happened in the past, but we have to look forward."