Wahlco Environmental Systems Inc. / SANTA ANA

Nature of business: Designs, manufactures and markets air and water pollution control equipment for the power and utility industries.

Total employees: 800*

Orange County employees: 120

Stock designation: Listed on NYSE as Wahlco.

Ticker Symbol: WAL

Friday’s stock close: $13.13

Change: (up or down): -$0.13

Analyst review: “Wahlco is the dominant company in flue gas-conditioning systems, which are used by the old utility plants that are trying to reduce sulfur dioxide emission in accordance with the clean air acts. Wahlco has 90% of the U.S. market and 75% of the overseas market. They are an attractive company that can grow. We think they will have earnings of 65 cents per share this year and 85 cents next year. Revenues should be $80 million this year, and we anticipate revenues to reach $100 million next year. We also think the stock has a potential of moving to $20 to $21 over the next 18 to 24 months.

--Vishnu Swarup, senior analyst, Prudential Securities Inc., New York

Sales and Profits (Dollar amounts in millions)

1987 1988 1989 1990 1991 $8.3 $17.9 $40.6 $57.7 $34.1

Profits

1987 1988 1989 1990 1991 -$5.5 $4.2 $10.4 $9.0 $3.5

Corporate Outlook: “We are definitely in a business that has gone global. We can no longer stay as an isolated company--that’s why we’ve expanded overseas. We have manufacturingfacilities in the U.S., Canada, Puerto Rico, Australia, India, England and Wales. We see continued growth because of the tightening of pollution laws all over the world.”

--Henry N. Huta, president/CEO

RETURN ON INVESTMENT: 4-YEAR SUMMARY AND YEAR-TO-DATE

Fiscal year ending Nov. 30* Dec. 31 Dec. 31 Dec. 31 2 Qtrs. ’87 ’88 ’89 ’90 ’91 52-Week High** N/A N/A N/A $16.63 $13.75 52-Week Low** N/A N/A N/A $6.13 $7.25 Price Per Share** N/A N/A N/A $8.63 $13.50 Net Earnings/Loss Per Share ($0.38) $0.20 $0.73 $0.55 $0.20 Price to Earnings Ratio N/A N/A N/A 16:1 68:1 Average Return to Investor N/A N/A N/A 10% 12%

* These are figures for 11 months; the company’s fiscal year end was changed from Nov. 30 to Dec. 31 when a wholly owned subsidiary of Diego Gas & Electric acquired Wahlco Inc. in October, 1987.

** Wahlco Inc. went public in April, 1990, as Wahlco Environmental Systems Inc.; San Diego Gas & Electric still owns 80% of the stock.

For more information, call or write Wahlco Environmental Systems, Inc.: 3600 W. Segerstrom, Santa Ana, CA 92704. (714) 979-7300

Source: Wahlco Environmental Systems, Inc.; Newport Securities