UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission File Number 001-31305

FOSTER WHEELER AG

(Exact name of registrant as specified in its charter)

Switzerland	98-0607469
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Shinfield Park
Reading Berkshire RG2 9FW, United Kingdom	RG2 9FW
(Address of principal executive offices)	(Zip Code)

44 118 913 1234

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 100,142,099 registered shares were outstanding as of April 19, 2013.

FOSTER WHEELER AG

INDEX

Part I FINANCIAL INFORMATION			3
Item 1	–	Financial Statements (Unaudited):	3
		Consolidated Statement of Operations for the Three Months Ended March 31, 2013 and 2012	3
		Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2013 and 2012	4
		Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012	5
		Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2013 and 2012	6
		Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2013 and 2012	7
		Notes to Consolidated Financial Statements	8
Item 2	–	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	–	Quantitative and Qualitative Disclosures about Market Risk	48
Item 4	–	Controls and Procedures	48
Part II OTHER INFORMATION			48
Item 1	–	Legal Proceedings	48
Item 1A	–	Risk Factors	48
Item 2	–	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3	–	Defaults Upon Senior Securities	50
Item 4	–	Mine Safety Disclosures	50
Item 5	–	Other Information	50
Item 6	–	Exhibits	51
Signatures			52

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands of dollars, except per share amounts)

(unaudited)

	Three Months Ended March 31,
	2013			2012
Operating revenues	$	796,288		$	933,096
Cost of operating revenues		680,579			793,764
Contract profit		115,709			139,332
Selling, general and administrative expenses		90,473			83,281
Other income, net		(4,751	)		(8,184	)
Other deductions, net		5,312			4,064
Interest income		(1,462	)		(3,169	)
Interest expense		2,672			3,416
Net asbestos-related provision		2,000			1,997
Income before income taxes		21,465			57,927
Provision for income taxes		5,160			14,884
Net income		16,305			43,043
Less: Net income attributable to noncontrolling interests		3,279			2,397
Net income attributable to Foster Wheeler AG	$	13,026		$	40,646
Earnings per share (see Note 1):
Basic	$	0.12		$	0.38
Diluted	$	0.12		$	0.38

See notes to consolidated financial statements.

3

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in thousands of dollars)

(unaudited)

	Three Months Ended March 31,
	2013			2012
Net income	$	16,305		$	43,043
Other comprehensive (loss)/income, net of tax:
Foreign currency translation adjustments, net of tax		(14,413	)		14,272
Cash flow hedges adjustments:
Unrealized loss		(818	)		(2,026	)
Tax impact		208			749
Unrealized loss, net of tax		(610	)		(1,277	)
Reclassification for losses included in net income (see Note 8 for further information)		1,135			896
Tax impact		(288	)		(330	)
Reclassification for losses included in net income, net of tax		847			566
Total cash flow hedges adjustments, net of tax		237			(711	)
Pension and other postretirement benefits adjustments, net of tax:
Amortization included in net periodic pension cost (see Note 6 for further information):
Net actuarial loss		4,664			4,256
Tax impact		(449	)		(393	)
Net actuarial loss, net of tax		4,215			3,863
Prior service credit		(1,264	)		(1,272	)
Tax impact		91			99
Prior service cost, net of tax		(1,173	)		(1,173	)
Transition obligation		14			13
Tax impact		3			4
Transition obligation, net of tax		17			17
Total pension and other postretirement benefits adjustments, net of tax		3,059			2,707
Other comprehensive (loss)/income, net of tax		(11,117	)		16,268
Comprehensive income		5,188			59,311
Less: Comprehensive income attributable to noncontrolling interests		2,492			3,722
Comprehensive income attributable to Foster Wheeler AG	$	2,696		$	55,589

See notes to consolidated financial statements.

4

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands of dollars, except share data and per share amounts)

(unaudited)

	March 31, 2013			December 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	475,716		$	582,322
Accounts and notes receivable, net:
Trade		584,692			610,695
Other		83,744			86,981
Contracts in process		242,919			228,979
Prepaid, deferred and refundable income taxes		56,462			57,404
Other current assets		47,340			47,161
Total current assets		1,490,873			1,613,542
Land, buildings and equipment, net		321,859			334,141
Restricted cash		44,310			63,029
Notes and accounts receivable - long-term		13,828			14,119
Investments in and advances to unconsolidated affiliates		205,313			205,476
Goodwill		141,275			133,518
Other intangible assets, net		113,676			105,100
Asbestos-related insurance recovery receivable		130,434			132,438
Other assets		96,827			90,509
Deferred tax assets		41,638			42,052
TOTAL ASSETS	$	2,600,033		$	2,733,924
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current Liabilities:
Current installments on long-term debt	$	13,386		$	13,672
Accounts payable		284,260			300,225
Accrued expenses		208,663			232,197
Billings in excess of costs and estimated earnings on uncompleted contracts		537,518			565,101
Income taxes payable		60,090			64,992
Total current liabilities		1,103,917			1,176,187
Long-term debt		121,328			124,034
Deferred tax liabilities		40,265			40,889
Pension, postretirement and other employee benefits		173,763			177,345
Asbestos-related liability		250,578			259,350
Other long-term liabilities		178,321			190,132
Commitments and contingencies
TOTAL LIABILITIES		1,868,172			1,967,937
Temporary Equity:
Non-vested share-based compensation awards subject to redemption		8,192			8,594
TOTAL TEMPORARY EQUITY		8,192			8,594
Equity:
Registered shares:
CHF 3.00 par value; authorized: 171,191,184 shares and 171,018,974 shares, respectively; conditionally authorized: 59,197,513 shares and 59,369,723 shares, respectively; issued: 108,873,228 shares and 108,701,018 shares, respectively; outstanding: 103,113,799 shares and 104,441,589 shares, respectively.		270,179			269,633
Paid-in capital		271,947			266,943
Retained earnings		849,019			835,993
Accumulated other comprehensive loss		(577,933	)		(567,603	)
Treasury shares (outstanding: 5,759,429 shares and 4,259,429 shares, respectively)		(124,924	)		(90,976	)
TOTAL FOSTER WHEELER AG SHAREHOLDERS’ EQUITY		688,288			713,990
Noncontrolling interests		35,381			43,403
TOTAL EQUITY		723,669			757,393
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY	$	2,600,033		$	2,733,924

See notes to consolidated financial statements.

5

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands of dollars)

(unaudited)

	Registered Shares		Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Shares			Total Foster Wheeler AG Shareholders’ Equity			Noncontrolling Interests			Total Equity
Three Months Ended March 31, 2012:
Balance at December 31, 2011	$	321,181	$	606,053		$	699,971	$	(530,068	)	$	(409,390	)	$	687,747		$	47,925		$	735,672
Net income		-		-			40,646		-			-			40,646			2,397			43,043
Other comprehensive income, net of tax		-		-			-		14,943			-			14,943			1,325			16,268
Issuance of registered shares upon exercise of stock options		105		465			-		-			-			570			-			570
Issuance of registered shares upon vesting of restricted awards		169		(169	)		-		-			-			-			-			-
Distributions to noncontrolling interests		-		-			-		-			-			-			(11,734	)		(11,734	)
Share-based compensation expense		-		3,624			-		-			-			3,624			-			3,624
Excess tax shortfall related to share-based compensation		-		(57	)		-		-			-			(57	)		-			(57	)
Repurchase of registered shares		-		-			-		-			(10,955	)		(10,955	)		-			(10,955	)
Balance at March 31, 2012	$	321,455	$	609,916		$	740,617	$	(515,125	)	$	(420,345	)	$	736,518		$	39,913		$	776,431
Three Months Ended March 31, 2013:
Balance at December 31, 2012	$	269,633	$	266,943		$	835,993	$	(567,603	)	$	(90,976	)	$	713,990		$	43,403		$	757,393
Net income		-		-			13,026		-			-			13,026			3,279			16,305
Other comprehensive loss, net of tax		-		-			-		(10,330	)		-			(10,330	)		(787	)		(11,117	)
Issuance of registered shares upon exercise of stock options		97		546			-		-			-			643			-			643
Issuance of registered shares upon vesting of restricted awards		449		(449	)		-		-			-			-			-			-
Distributions to noncontrolling interests		-		-			-		-			-			-			(10,514	)		(10,514	)
Share-based compensation expense		-		4,992			-		-			-			4,992			-			4,992
Excess tax shortfall related to share-based compensation		-		(85	)		-		-			-			(85	)		-			(85	)
Repurchase of registered shares		-		-			-		-			(33,948	)		(33,948	)		-			(33,948	)
Balance at March 31, 2013	$	270,179	$	271,947		$	849,019	$	(577,933	)	$	(124,924	)	$	688,288		$	35,381		$	723,669

See notes to consolidated financial statements.

6

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of dollars)

(unaudited)

	Three Months Ended March 31,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	16,305		$	43,043
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		19,261			13,020
Net asbestos-related provision		2,000			1,997
Share-based compensation expense		4,590			4,926
Excess tax shortfall related to share-based compensation		85			57
Deferred income tax provision		4,218			5,467
Loss/(gain) on sale of assets		59			(69	)
Equity in earnings of unconsolidated affiliates, net of dividends		(2,023	)		(4,412	)
Other noncash items, net		(29	)		-
Changes in assets and liabilities, net of effects from acquisitions:
Decrease/(increase) in receivables		38,446			(137,021	)
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts		(36,464	)		(9,252	)
(Decrease)/increase in accounts payable and accrued expenses		(52,684	)		33,407
Net change in other current assets and liabilities		(11,008	)		(9,975	)
Net change in other long-term assets and liabilities		(19,201	)		(11,216	)
Net cash used in operating activities		(36,445	)		(70,028	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment related to acquisition of a business, net of cash acquired		(24,895	)		-
Change in restricted cash		17,929			7,182
Capital expenditures		(7,862	)		(7,645	)
Proceeds from sale of assets		121			163
Return of investment from unconsolidated affiliates		82			6,117
Net cash (used in)/provided by investing activities		(14,625	)		5,817
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares		(33,948	)		(10,955	)
Distributions to noncontrolling interests		(10,514	)		(11,734	)
Proceeds from stock options exercised		643			570
Excess tax shortfall related to share-based compensation		(85	)		(57	)
Repayment of debt and capital lease obligations		(632	)		(686	)
Net cash used in financing activities		(44,536	)		(22,862	)
Effect of exchange rate changes on cash and cash equivalents		(11,000	)		17,928
DECREASE IN CASH AND CASH EQUIVALENTS		(106,606	)		(69,145	)
Cash and cash equivalents at beginning of year		582,322			718,049
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	475,716		$	648,904

See notes to consolidated financial statements

7

FOSTER WHEELER AG AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands of dollars, except share data and per share amounts)

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation — The fiscal year of Foster Wheeler AG ends on December 31 of each calendar year. Foster Wheeler AG’s fiscal quarters end on the last day of March, June and September. The fiscal years of our non-U.S. operations are the same as the parent’s. The fiscal year of our U.S. operations is the 52- or 53-week annual accounting period ending on the last Friday in December.

The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments only consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year.

The consolidated financial statements and notes are presented in accordance with the requirements of Form 10-Q and do not contain certain information included in our Annual Report on Form 10-K for the year ended December 31, 2012 (“2012 Form 10-K”), filed with the Securities and Exchange Commission on March 1, 2013. The consolidated balance sheet as of December 31, 2012 was derived from the audited financial statements included in our 2012 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements.

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications include the presentation of our Statement of Comprehensive Income as a result of our adoption of “ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, or ASU No. 2013-02. ASU No. 2013-02 was issued by the Financial Accounting Standards Board in February 2013. The standard requires disclosure of the effects on the line items of net income for significant amounts reclassified out of accumulated other comprehensive income and a cross-reference to other disclosures when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts for pension-related amounts) instead of directly to income or expense. The adoption of this standard did not have an impact on our results of operations, financial position or cash flows.

Reclassifications from accumulated other comprehensive loss related to cash flow hedges amounted to losses of $847 during the first three months of 2013. These losses included amounts related to our consolidated entities and our proportionate share of the impact from interest rate swap contracts in cash flow hedging relationships held by our equity method investees. Amounts that are reclassified from accumulated other comprehensive loss related to cash flow hedges from our consolidated entities are recognized within interest expense on the consolidated statement of operations, whereas amounts related to our equity method investees are recognized within equity earnings in other income, net on the consolidated statement of operations.

Reclassifications from accumulated other comprehensive loss related to pension and other postretirement benefits are included as a component of net periodic pension cost. Please refer to Note 8 for further information.

The tax effect related to foreign currency translation adjustments was inconsequential during the first three months of 2013.

The consolidated financial statements include the accounts of Foster Wheeler AG and all U.S. and non-U.S. subsidiaries, as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated. See “—Variable Interest Entities” below for further information related to the consolidation of variable interest entities.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. Significant estimates are used in accounting for long-term contracts including estimates of total costs, progress toward completion and customer and vendor claims, employee benefit plan obligations and share-based compensation plans. In addition, we also use estimates when accounting for uncertain tax positions and deferred taxes, asbestos liabilities and expected recoveries and when assessing goodwill for impairment, among others.

8

Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term contracts are recorded under the percentage-of-completion method.

Progress towards completion on fixed-price contracts is measured based on physical completion of individual tasks for all contracts with a value of $5,000 or greater. For contracts with a value less than $5,000, progress toward completion is measured based on the ratio of costs incurred to total estimated contract costs (the cost-to-cost method).

Progress towards completion on cost-reimbursable contracts is measured based on the ratio of quantities expended to total forecasted quantities, typically man-hours. Incentives are also recognized on a percentage-of-completion basis when the realization of an incentive is assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as both operating revenues and cost of operating revenues on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs. There is no contract profit impact of flow-through costs as they are included in both operating revenues and cost of operating revenues.

Contracts in process are stated at cost, increased for profits recorded on the completed effort or decreased for estimated losses, less billings to the customer and progress payments on uncompleted contracts. A full provision for loss contracts is made at the time the loss becomes probable regardless of the stage of completion.

At any time, we have numerous contracts in progress, all of which are at various stages of completion. Accounting for revenues and profits on long-term contracts requires estimates of total contract costs and estimates of progress toward completion to determine the extent of revenue and profit recognition. These estimates may be revised as additional information becomes available or as specific project circumstances change. We review all of our material contracts on a monthly basis and revise our estimates as appropriate for developments such as earning project incentive bonuses, incurring or expecting to incur contractual liquidated damages for performance or schedule issues, providing services and purchasing third-party materials and equipment at costs differing from those previously estimated and testing completed facilities, which, in turn, eliminates or confirms completion and warranty-related costs. Project incentives are recognized when it is probable they will be earned. Project incentives are frequently tied to cost, schedule and/or safety targets and, therefore, tend to be earned late in a project’s life cycle.

Changes in estimated final contract revenues and costs can either increase or decrease the final estimated contract profit. In the period in which a change in estimate is recognized, the cumulative impact of that change is recorded based on progress achieved through the period of change. The following table summarizes the number of separate projects that experienced final estimated contract profit revisions with an impact on contract profit in excess of $1,000 relating to the revaluation of work performed in prior periods:

	Three Months Ended March 31,
	2013		2012
Number of separate projects		11		11
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions	$	19,000	$	14,100

The changes in final estimated contract profit revisions for our Global Power Group were increased during the three months ended March 31, 2012 for a favorable settlement with a subcontractor of approximately $6,900 recognized in the first quarter of 2012.

Please see Note 11 for further information related to changes in final estimated contract profit and the impact on business segment results.

Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, disputed or unapproved change orders as to both scope and price or other causes of unanticipated additional costs. We record claims as additional contract revenue if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. These two requirements are satisfied by the existence of all of the following conditions: the contract or other evidence provides a legal basis for the claim; additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in our performance; costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and the evidence supporting the claim is objective and verifiable. If such requirements are met, revenue from a claim may be recorded only to the extent that contract costs relating to the claim have been incurred. Costs attributable to claims are treated as costs of contract performance as incurred and

9

are recorded in contracts in process. Our consolidated financial statements included commercial claims of $16,000 and $8,800 as of March 31, 2013 and December 31, 2012, respectively; which costs totaling $9,500 had been incurred as of March 31, 2013 and substantially all costs had been incurred as of December 31, 2012.

In certain circumstances, we may defer pre-contract costs when it is probable that these costs will be recovered under a future contract. Such deferred costs would then be included in contract costs upon execution of the anticipated contract. Deferred pre-contract costs were inconsequential as of March 31, 2013 and December 31, 2012.

Certain special-purpose subsidiaries in our Global Power Group business segment are reimbursed by customers for their costs of building and operating certain facilities over the lives of the corresponding service contracts. Depending on the specific legal rights and obligations under these arrangements, in some cases those reimbursements are treated as operating revenues at gross value and other cases as a reduction of cost.

Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. In accordance with terms under our long-term contracts, our customers may withhold certain percentages of such billings until completion and acceptance of the work performed, which we refer to as retention receivables. Final payment of retention receivables might not be received within a one-year period. In conformity with industry practice, however, the full amount of accounts receivable, including such amounts withheld, are included in current assets on the consolidated balance sheet. We have not recorded a provision for the outstanding retention receivable balances as of March 31, 2013 and December 31, 2012.

Variable Interest Entities — We sometimes form separate legal entities such as corporations, partnerships and limited liability companies in connection with the execution of a single contract or project. Upon formation of each separate legal entity, we perform an evaluation to determine whether the new entity is a variable interest entity, or VIE, and whether we are the primary beneficiary of the new entity, which would require us to consolidate the new entity in our financial results. We reassess our initial determination on whether the entity is a VIE upon the occurrence of certain events and whether we are the primary beneficiary as outlined in current accounting guidelines. If the entity is not a VIE, we determine the accounting for the entity under the voting interest accounting guidelines.

An entity is determined to be a VIE if either (a) the total equity investment is not sufficient for the entity to finance its own activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (such as the ability to make decisions through voting or other rights or the obligation to absorb losses or the right to receive benefits), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb losses of the entity and/or their rights to receive benefits of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

As of March 31, 2013 and December 31, 2012, we participated in certain entities determined to be VIEs, including a gas-fired cogeneration facility in Martinez, California and a refinery/electric power generation project in Chile. We consolidate the operations of the Martinez project while we record our participation in the project in Chile on the equity method of accounting.

Please see Note 3 for further information regarding our participation in these projects.

Fair Value Measurements — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, 820-10 defines fair value, establishes a three level fair value hierarchy that prioritizes the inputs used to measure fair value and provides guidance on required disclosures about fair value measurements. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

Our financial assets and liabilities that are recorded at fair value on a recurring basis consist primarily of the assets or liabilities arising from derivative financial instruments and defined benefit pension plan assets. See Note 8 for further information regarding our derivative financial instruments.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value:

Financial instruments valued independent of the fair value hierarchy:

• Cash, Cash Equivalents and Restricted Cash — The carrying value of our cash, cash equivalents and restricted cash approximates fair value because of the demand nature of many of our deposits or short-term maturity of these instruments.

10

Financial instruments valued within the fair value hierarchy:

• Long-term Debt — We estimate the fair value of our long-term debt (including current installments) based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities using level 2 inputs.

• Foreign Currency Forward Contracts — We estimate the fair value of foreign currency forward contracts by obtaining quotes from financial institutions or market transactions in either the listed or over-the-counter markets. Our estimate of the fair value of foreign currency forward contracts also includes an assessment of non-performance by our counterparties. We further corroborate the valuations with observable market data using level 2 inputs.

• Interest Rate Swaps — We estimate the fair value of our interest rate swaps based on quotes obtained from financial institutions, which we further corroborate with observable market data using level 2 inputs.

• Defined Benefit Pension Plan Assets — We estimate the fair value of investments in equity securities at each year-end based on quotes obtained from financial institutions. The fair value of investments in commingled funds, invested primarily in debt and equity securities, is based on the net asset values communicated by the respective asset manager. We further corroborate the above valuations with observable market data using level 1 and 2 inputs. Additionally, we hold investments in private investment funds that are valued at net asset value as communicated by the asset manager using level 3 unobservable market data inputs.

Retirement of Shares under Share Repurchase Program — Under Swiss law, the cancellation of shares previously repurchased under our share repurchase program must be approved by our shareholders. Repurchased shares remain as treasury shares on our balance sheet until cancellation.

Any repurchases will be made at our discretion in compliance with applicable securities laws and other legal requirements and will depend on a variety of factors, including market conditions, share price and other factors. The program does not obligate us to acquire any particular number of shares. The program has no expiration date and may be suspended or discontinued at any time.

All treasury shares are carried at cost on the consolidated balance sheet until the cancellation of the shares has been approved by our shareholders and the cancellation is registered with the commercial register of the Canton of Zug in Switzerland. Upon the effectiveness of the cancellation of the shares, the cost of the shares cancelled will be removed from treasury shares on the consolidated balance sheet, the par value of the cancelled shares will be removed from registered shares on the consolidated balance sheet, and the excess of the cost of the treasury shares above par value will be removed from paid-in capital on the consolidated balance sheet.

Once repurchased, treasury shares are no longer considered outstanding, which results in a reduction to the weighted-average number of shares outstanding during the reporting period when calculating earnings per share, as described below.

Earnings per Share — Basic earnings per share amounts have been computed based on the weighted-average number of shares outstanding during the reporting period.

Diluted earnings per share amounts have been based on the combination of the weighted-average number of shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options and the non-vested portion of restricted stock units and performance-based restricted stock units (collectively, “restricted awards”) to the extent such securities are dilutive.

In profitable periods, outstanding stock options have a dilutive effect under the treasury stock method when the average share price for the period exceeds the assumed proceeds from the exercise of the option. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the consolidated statement of operations, and any tax benefits that would be recorded in paid-in capital when the option is exercised. Under the treasury stock method, the assumed proceeds are assumed to be used to repurchase shares in the current period. The dilutive impact of the non-vested portion of restricted awards is determined using the treasury stock method, but the proceeds include only the unrecognized compensation cost and tax benefits as assumed proceeds.

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The computations of basic and diluted earnings per share were as follows:

	Three Months Ended March 31,
	2013		2012
Net income attributable to Foster Wheeler AG	$	13,026	$	40,646
Basic weighted-average number of shares outstanding		104,386,669		107,774,203
Effect of dilutive securities		253,330		107,604
Diluted weighted-average number of shares outstanding		104,639,999		107,881,807
Earnings per share:
Basic	$	0.12	$	0.38
Diluted	$	0.12	$	0.38

The following table summarizes share-based compensation awards not included in the calculation of diluted earnings per share as the assumed proceeds from those awards, on a per share basis, were greater than the average share price for the period, which would result in an antidilutive effect on diluted earnings per share:

	Three Months Ended March 31,
	2013		2012
Stock options		1,574,710		2,022,794
Performance-based restricted share units		1,132,649		131,207

2. Business Combinations

During our U.S. operations’ fiscal first quarter of 2013, we acquired a U.S.-based firm that specializes in the management of construction and commissioning of pharmaceutical and biotech facilities and which also has the capabilities to manage the full engineering, procurement and construction of such facilities. In addition, the acquired business has the ability to provide modular project delivery services on a worldwide basis through its participation in a project-services partnership. At closing, we paid cash consideration net of cash acquired of $24,900, subject to customary working capital adjustments, as specified in the sale and purchase agreement. The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of approximately $6,600, depending on the acquired company’s performance, as defined in the sale and purchase agreement, over a period of approximately 5 years subsequent to the acquisition date. The earnout will be reported as compensation expense in periods subsequent to the acquisition date rather than as part of the purchase price for the business. Our consolidated balance sheet as of March 31, 2013 included a preliminary purchase price allocation for this acquisition. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2013 were not significant to our consolidated financial statements. The assets, liabilities and results of operations of the acquired business are included within our Global Engineering and Construction Group (“Global E&C Group”) business segment.

In November 2012, we acquired all of the outstanding shares of a privately held multi-discipline full service engineering, procurement, and construction management company located in North America. At closing, we paid cash consideration net of cash acquired of $68,800, subject to customary working capital adjustments, as specified in the sale and purchase agreement. The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of approximately $20,000, depending on the acquired company’s performance, as defined in the sale and purchase agreement, over a period of approximately 5 years subsequent to the acquisition date. The earnout will be reported as compensation expense in periods subsequent to the acquisition date rather than as part of the purchase price for the business. Our consolidated balance sheet as of December 31, 2012 filed in our 2012 Form 10-K included a preliminary purchase price allocation for this acquisition, which did not change as a result of our finalization of the valuation of net assets acquired. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment.

3. Investments

Investment in Unconsolidated Affiliates

We own a noncontrolling interest in two electric power generation projects, one waste-to-energy project and one wind farm project, which are all located in Italy, and in a refinery/electric power generation project, which is located in Chile. We also own a 50% noncontrolling interest in a project in Italy which generates earnings from royalty payments linked to the price of natural gas. Based on the outstanding equity interests of these entities, we own

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41.65% of each of the two electric power generation projects in Italy, 39% of the waste-to-energy project and 50% of the wind farm project. We have a notional 85% equity interest in the project in Chile; however, we are not the primary beneficiary as a result of participation rights held by the minority shareholder. In determining that we are not the primary beneficiary, we considered the minority shareholder’s right to approve activities of the project that most significantly impact the project’s economic performance which include the right to approve or reject the annual financial (capital and operating) budget and the annual operating plan, the right to approve or reject the appointment of the general manager and senior management, and approval rights with respect to capital expenditures beyond those included in the annual budget.

We account for these investments in Italy and Chile under the equity method. The following is summarized financial information for these entities (each as a whole) based on where the projects are located:

	March 31, 2013				December 31, 2012
	Italy		Chile		Italy		Chile
Balance Sheet Data:
Current assets	$	143,541	$	142,640	$	142,584	$	137,626
Other assets (primarily buildings and equipment)		343,463		96,147		358,366		98,550
Current liabilities		93,084		62,471		91,085		60,082
Other liabilities (primarily long-term debt)		208,466		16,413		214,025		23,061
Net assets	$	185,454	$	159,903	$	195,840	$	153,033

	Three Months Ended March 31,
	2013					2012
	Italy			Chile		Italy			Chile
Income Statement Data:
Total revenues	$	33,009		$	17,593	$	36,751		$	24,801
Gross profit/(loss)		196			9,215		(1,765	)		13,901
(Loss)/income before income taxes		(1,653	)		8,885		(4,247	)		14,198
Net (loss)/earnings		(1,271	)		6,868		(2,349	)		11,796

Our investment in these unconsolidated affiliates is recorded within investments in and advances to unconsolidated affiliates on the consolidated balance sheet and our equity in the net earnings of these unconsolidated affiliates is recorded within other income, net on the consolidated statement of operations. The investments and equity earnings of our unconsolidated affiliates in Italy and Chile are included in our Global E&C Group and Global Power Group business segments, respectively.

Our consolidated financial statements reflect the following amounts related to our unconsolidated affiliates in Italy and Chile:

	Three Months Ended March 31,
	2013		2012
Equity in the net earnings of unconsolidated affiliates	$	4,104	$	6,908
Distributions from equity affiliates	$	1,943	$	8,772

	March 31, 2013		December 31, 2012
Investments in unconsolidated affiliates	$	187,460	$	187,363

Our equity loss from our projects in Italy were inconsequential in the first three months of 2013 and 2012, respectively.

Our equity earnings from our project in Chile were $4,227 and $7,270 in the first three months of 2013 and 2012, respectively. The decrease in equity earnings from our project in Chile in the three months ended March 31, 2013, compared to the same period in 2012, was primarily driven by the impact of lower marginal rates in 2013 for electrical power generation and a decrease in the volume of electricity produced by the project in 2013 due to a planned maintenance outage.

We have guaranteed certain performance obligations of our project in Chile. We have a contingent obligation, which is measured annually based on the operating results of our project in Chile for the preceding year and is shared equally with our minority interest partner. We did not have a current payment obligation under this guarantee as of March 31, 2013 or December 31, 2012.

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In addition, we have provided a $10,000 debt service reserve letter of credit to cover debt service payments in the event that our project in Chile does not generate sufficient cash flows to make such payments. We are required to maintain the debt service reserve letter of credit during the term of our project in Chile’s debt, which matures in 2014. As of March 31, 2013, no amounts have been drawn under this letter of credit and we do not anticipate any amounts being drawn under this letter of credit.

We also have a wholly-owned subsidiary that provides operations and maintenance services to our project in Chile. We record the fees for operations and maintenance services in operating revenues on our consolidated statement of operations and the corresponding receivable in trade accounts and notes receivable on our consolidated balance sheet.

Our consolidated financial statements include the following balances related to our project in Chile:

	Three Months Ended March 31,
	2013		2012
Fees for operations and maintenance services (included in operating revenues)	$	2,804	$	2,634

	March 31, 2013		December 31, 2012
Receivable from our unconsolidated affiliate in Chile (included in trade receivables)	$	19,121	$	16,933

We also have guaranteed the performance obligations of our wholly-owned subsidiary under the operations and maintenance agreement governing our project in Chile. The guarantee is limited to $20,000 over the life of the operations and maintenance agreement, which extends through 2016. No amounts have ever been paid under the guarantee.

Other Investments

We are the majority equity partner and general partner of a gas-fired cogeneration project in Martinez, California, which we have determined to be a VIE as of March 31, 2013 and December 31, 2012. We are the primary beneficiary of the VIE, since we have the power to direct the activities that most significantly impact the VIE’s performance. These activities include the operations and maintenance of the facilities. Accordingly, as the primary beneficiary of the VIE, we have consolidated this entity. The aggregate net assets of this entity are presented below.

Balance Sheet Data (excluding intercompany balances):	March 31, 2013		December 31, 2012
Current assets	$	6,673	$	15,610
Other assets (primarily buildings and equipment)		38,391		39,194
Current liabilities		4,218		4,825
Other liabilities		5,344		5,452
Net assets	$	35,502	$	44,527

4. Goodwill and Other Intangible Assets

We have tracked accumulated goodwill impairments since December 29, 2001, the first day of fiscal year 2002 and our date of adoption of the accounting guidelines related to the assessment of goodwill for impairment. There were no accumulated goodwill impairment losses as of that date. The following table provides our net carrying amount of goodwill by geographic region in which our reporting units are located:

	Global E&C Group				Global Power Group
	March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012
North America	$	65,797	$	55,962	$	4,266	$	4,266
Asia		867		858		-		-
Europe		2,414		2,568		67,931		69,864
Total	$	69,078	$	59,388	$	72,197	$	74,130

Our Global E&C Group’s North America goodwill balance includes an increase of $10,193 related to our acquisition during the three months ended March 31, 2013. Please see Note 2 for further information regarding this acquisition.

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The following table sets forth amounts relating to our identifiable intangible assets:

	March 31, 2013							December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Patents	$	40,839	$	(32,596	)	$	8,243	$	41,103	$	(32,273	)	$	8,830
Trademarks		64,353		(31,744	)		32,609		64,582		(31,483	)		33,099
Customer relationships, pipeline and backlog		84,712		(17,155	)		67,557		72,050		(14,531	)		57,519
Technology		6,412		(1,145	)		5,267		6,594		(942	)		5,652
Total	$	196,316	$	(82,640	)	$	113,676	$	184,329	$	(79,229	)	$	105,100

As of March 31, 2013, the net carrying amounts of our identifiable intangible assets were $48,681 for our Global Power Group and $64,995 for our Global E&C Group. Amortization expense related to identifiable intangible assets is recorded within cost of operating revenues on the consolidated statement of operations. Amortization expense related to assets other than identifiable intangible assets was not material in the three months ended March 31, 2013 and 2012.

The following table details amortization expense related to identifiable intangible assets by period:

	Three Months Ended March 31,
	2013		2012
Amortization expense	$	4,054	$	3,022
Approximate full year amortization expense for years:
2013			$	16,200
2014				15,700
2015				11,100
2016				8,700
2017				8,200

5. Borrowings

The following table shows the components of our long-term debt:

	March 31, 2013						December 31, 2012
	Current		Long-term		Total		Current		Long-term		Total
Capital Lease Obligations	$	2,514	$	52,778	$	55,292	$	2,545	$	53,780	$	56,325
Special-Purpose Limited Recourse Project Debt:
FW Power S.r.l.		8,960		59,871		68,831		9,215		61,575		70,790
Energia Holdings, LLC at 11.443% interest, due April 15, 2015		1,912		7,396		9,308		1,912		7,396		9,308
Subordinated Robbins Facility Exit Funding Obligations: 1999C Bonds at 7.25% interest, due October 15, 2024		-		1,283		1,283		-		1,283		1,283
Total	$	13,386	$	121,328	$	134,714	$	13,672	$	124,034	$	137,706
Estimated fair value					$	152,100					$	155,718

Senior Credit Agreements — On August 3, 2012, we entered into a new five-year senior unsecured credit agreement, which replaced our amended and restated senior unsecured credit agreement from July 2010. Our new senior credit agreement provides for an unsecured revolving line of credit of $750,000 and contains an increase option permitting us, subject to certain requirements, to arrange with existing lenders and/or new lenders to provide up to an aggregate of $300,000 in additional commitments. During the term of this senior credit agreement, we may request, subject to certain requirements, up to two one-year extensions of the contractual termination date.

We can issue up to $750,000 under the letter of credit portion of the facility. Letters of credit issued under our new senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in our corporate credit ratings, as defined in the senior credit agreement. Based on our current credit

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ratings, letter of credit fees for performance and non-performance letters of credit issued under our new senior credit agreement are 0.75% and 1.50% per annum of the outstanding amount, respectively, excluding a nominal fronting fee. We also have the option to use up to $250,000 of the $750,000 for revolving borrowings at a rate equal to adjusted LIBOR, as defined in the senior credit agreement, plus 1.50%, subject also to the performance pricing noted above.

Fees and expenses incurred in conjunction with the execution of our new senior credit agreement were approximately $4,000 and, along with a portion of the remaining unamortized fees from our July 2010 agreement, are being amortized to expense over the five-year term of the agreement, which commenced in the third quarter of 2012.

Our new senior credit agreement contains various customary restrictive covenants. In addition, our new senior credit agreement contains financial covenants relating to leverage and interest coverage ratios. Our total leverage ratio compares total indebtedness to EBITDA and our total interest coverage ratio compares EBITDA to interest expense. Both the leverage and interest coverage ratios are measured quarterly. In addition, the leverage ratio is measured as of any date of determination for certain significant events. All such terms are defined in our new senior credit agreement. We have been in compliance with all financial covenants and other provisions of both our August 2012 and our July 2010 senior credit agreements, while the respective agreements were in effect during the three months ended March 31, 2013 and 2012.

We had approximately $218,600 and $250,600 of letters of credit outstanding under our senior credit agreements in effect as of March 31, 2013 and December 31, 2012, respectively. The letter of credit fees under our senior credit agreements in effect as of March 31, 2013 and December 31, 2012 ranged from 0.75% to 1.50% of the outstanding amount, excluding fronting fees. There were no funded borrowings outstanding under our senior credit agreements in effect as of March 31, 2013 and December 31, 2012.

6. Pensions and Other Postretirement Benefits

We have defined benefit pension plans in the United States, or U.S., the United Kingdom, or U.K., Canada, Finland, France, India and South Africa, and we have other postretirement benefit plans, which we refer to as OPEB plans, for health care and life insurance benefits in the U.S. and Canada.

Defined Benefit Pension Plans — Our defined benefit pension plans, or pension plans, cover certain full-time employees. Under the pension plans, retirement benefits are primarily a function of both years of service and level of compensation. The U.S. pension plans, which are closed to new entrants and additional benefit accruals, and the Canada, Finland, France and India pension plans are non-contributory. The U.K. pension plan, which is closed to new entrants and additional benefit accruals, and the South Africa pension plan are both contributory plans.

Based on the minimum statutory funding requirements for 2013, we are not required to make any mandatory contributions to our U.S. pension plans. The following table provides details on 2013 mandatory contribution activity for our non-U.S. pension plans:

Contributions in the three months ended March 31,2013	$	5,000
Remaining contributions expected for the year 2013		16,300
Contributions expected for the year 2013	$	21,300

We did not make any discretionary contributions during the first three months of 2013; however, we may elect to make discretionary contributions to our U.S. and/or non-U.S. pension plans during the remainder of 2013.

Other Postretirement Benefit Plans — Certain employees in the U.S. and Canada may become eligible for health care and life insurance benefits (“other postretirement benefits”) if they qualify for and commence normal or early retirement pension benefits as defined in the U.S. and Canada pension plans while working for us. Additionally, one of our subsidiaries in the U.S. also has a benefit plan, referred to as the Survivor Income Plan (“SIP”), which provides coverage for an employee’s beneficiary upon the death of the employee. This plan has been closed to new entrants since 1988.

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Components of net periodic benefit cost include:

	Defined Benefit Pension Plans						OPEB Plans
	Three Months Ended March  31,						Three Months Ended March  31,
	2013			2012			2013			2012
Net periodic benefit cost:
Service cost	$	300		$	275		$	18		$	24
Interest cost		12,829			13,134			859			805
Expected return on plan assets		(16,291	)		(16,015	)		-			-
Amortization of net actuarial loss		4,474			4,136			190			120
Amortization of prior service credit		(390	)		(393	)		(874	)		(879	)
Amortization of transition obligation		14			13			-			-
Net periodic benefit cost	$	936		$	1,150		$	193		$	70

The components of net periodic benefit cost are recognized within cost of operating revenues and selling, general and administrative expenses on our consolidated statement of operations. Please refer to Note 1 for further discussion on the timing of when items in cost of operating revenues are recognized on our consolidated statement of operations under our accounting policy for revenue recognition on long-term contracts, which utilizes the percentage-of-completion method. The offsetting effect of the amortization components of net periodic benefit cost listed above are included in other comprehensive income on our consolidated statement of comprehensive income along with their corresponding tax effects.

7. Guarantees and Warranties

We have agreed to indemnify certain third parties relating to businesses and/or assets that we previously owned and sold to such third parties. Such indemnifications relate primarily to potential environmental and tax exposures for activities conducted by us prior to the sale of such businesses and/or assets. It is not possible to predict the maximum potential amount of future payments under these or similar indemnifications due to the conditional nature of the obligations and the unique facts and circumstances involved in each particular indemnification.

	Maximum	Carrying Amount of Liability
	Potential Payment	March 31, 2013		December 31, 2012
Environmental indemnifications	No limit	$	7,100	$	8,500
Tax indemnifications	No limit	$	-	$	-

We also maintain contingencies for warranty expenses on certain of our long-term contracts. Generally, warranty contingencies are accrued over the life of the contract so that a sufficient balance is maintained to cover our aggregate exposure at the conclusion of the project.

	Three Months Ended March 31,
	2013			2012
Warranty Liability:
Balance at beginning of year	$	90,100		$	93,000
Accruals		6,100			8,400
Settlements		(2,000	)		(2,800	)
Adjustments to provisions, including foreign currency translation		(5,900	)		(4,100	)
Balance at end of period	$	88,300		$	94,500

We are contingently liable under standby letters of credit, bank guarantees and surety bonds, totaling $932,900 and $1,015,900 as of March 31, 2013 and December 31, 2012, respectively, primarily for guarantees of our performance on projects currently in execution or under warranty. These amounts include the standby letters of credit issued under our senior unsecured credit agreement discussed in Note 5 and under other facilities worldwide. No material claims have been made against these guarantees, and based on our experience and current expectations, we do not anticipate any material claims.

We have also guaranteed certain performance obligations in a refinery/electric power generation project located in Chile in which we hold a noncontrolling interest. See Note 3 for further information.

8. Derivative Financial Instruments

We are exposed to certain risks relating to our ongoing business operations. The risks managed by using derivative financial instruments relate primarily to foreign currency exchange rate risk and, to a significantly lesser extent,

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interest rate risk. Derivative financial instruments held by our consolidated entities are recognized as assets or liabilities at fair value on our consolidated balance sheet. Our proportionate share of the fair value of derivative financial instruments held by our equity method investees is included in investments in and advances to unconsolidated affiliates on our consolidated balance sheet. The fair values of derivative financial instruments held by our consolidated entities were as follows:

Fair Values of Derivative Financial Instruments
		Asset Derivatives					Liability Derivatives
	Balance Sheet Location	March 31, 2013		December 31, 2012		Balance Sheet Location	March 31, 2013		December 31, 2012
Derivatives designated as hedging instruments:
Interest rate swap contracts	Other assets	$	-	$	-	Other long-term liabilities	$	10,025	$	10,490
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts		1,450		6,040	Contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts		9,221		4,895
Foreign currency forward contracts	Other accounts receivable		489		1,357	Accounts payable		509		29
Total derivatives		$	1,939	$	7,397		$	19,755	$	15,414

Foreign Currency Exchange Rate Risk

We operate on a worldwide basis with operations that subject us to foreign currency exchange rate risk mainly relative to the British pound, Chinese Yuan, Euro and U.S. dollar as of March 31, 2013. Under our risk management policies, we do not hedge translation risk exposure. All activities of our affiliates are recorded in their functional currency, which is typically the local currency in the country of domicile of the affiliate. In the ordinary course of business, our affiliates enter into transactions in currencies other than their respective functional currencies. We seek to minimize the resulting foreign currency transaction risk by contracting for the procurement of goods and services in the same currency as the sales value of the related long-term contract. We further mitigate the risk through the use of foreign currency forward contracts to hedge the exposed item, such as anticipated purchases or revenues, back to their functional currency.

The notional amount of our foreign currency forward contracts provides one measure of our transaction volume outstanding as of the balance sheet date. As of March 31, 2013, we had a total gross notional amount, measured in U.S. dollar equivalent, of approximately $494,800 related to foreign currency forward contracts. Amounts ultimately realized upon final settlement of these financial instruments, along with the gains and losses on the underlying exposures within our long-term contracts, will depend on actual market exchange rates during the remaining life of the instruments. The contract maturity dates range from the remainder of 2013 through 2015.

We are exposed to credit loss in the event of non-performance by the counterparties. These counterparties are commercial banks that are primarily rated “BBB+” or better by S&P (or the equivalent by other recognized credit rating agencies).

Increases in the fair value of the currencies sold forward result in losses while increases in the fair value of the currencies bought forward result in gains. For foreign currency forward contracts used to mitigate currency risk on our projects, the gain or loss from the portion of the mark-to-market adjustment related to the completed portion of the underlying project is included in cost of operating revenues at the same time as the underlying foreign currency exposure occurs. The gain or loss from the remaining portion of the mark-to-market adjustment, specifically the portion relating to the uncompleted portion of the underlying project is reflected directly in cost of operating revenues in the period in which the mark-to-market adjustment occurs. We also utilize foreign currency forward contracts to mitigate non-project related currency risks, which are recorded in other deductions, net.

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The gain or loss from the remaining uncompleted portion of our projects and other non-project related transactions were as follows:

	Location of Gain/(Loss)	Amount of Gain/(Loss) Recognized in Income  on Derivatives
Derivatives Not Designated as	Recognized	Three Months Ended March 31,
Hedging Instruments	in Income on Derivatives	2013			2012
Foreign currency forward contracts	Cost of operating revenues	$	(7,320	)	$	3,146
Foreign currency forward contracts	Other deductions, net		(1,276	)		91
Total		$	(8,596	)	$	3,237

The mark-to-market adjustments on foreign currency forward contracts for these unrealized gains or losses are primarily recorded in either contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts on the consolidated balance sheet.

During the three months ended March 31, 2013 and 2012, we included net cash (outflows)/inflows on the settlement of derivatives of $(889) and $713, respectively, within the “net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts,” a component of cash flows from operating activities on the consolidated statement of cash flows.

Interest Rate Risk

We use interest rate swap contracts to manage interest rate risk associated with a portion of our variable rate special-purpose limited recourse project debt. The aggregate notional amount of the receive-variable/pay-fixed interest rate swaps for our consolidated entities was $59,200 as of March 31, 2013.

Upon entering into the swap contracts, we designate the interest rate swaps as cash flow hedges. We assess at inception, and on an ongoing basis, whether the interest rate swaps are highly effective in offsetting changes in the cash flows of the project debt. Consequently, we record the fair value of interest rate swap contracts on our consolidated balance sheet at each balance sheet date. Changes in the fair value of the interest rate swap contracts are recorded as a component of other comprehensive income. Amounts that are reclassified from accumulated other comprehensive loss are recognized within interest expense on the consolidated statement of operations.

The impact from interest rate swap contracts in cash flow hedging relationships for our consolidated entities was as follows:

	Three Months Ended March 31,
	2013			2012
Loss recognized in other comprehensive income	$	(448	)	$	(1,156	)
Loss reclassified from accumulated other comprehensive loss to net income		625			485

The above balances for our consolidated entities and our proportionate share of the impact from interest rate swap contracts in cash flow hedging relationships held by our equity method investees are included on our consolidated statement of comprehensive income net of tax.

9. Share-Based Compensation Plans

Our share-based compensation plans include both stock options and restricted awards. The following table summarizes our share-based compensation expense and related income tax benefit:

	Three Months Ended March 31,
	2013		2012
Share-based compensation	$	4,590	$	4,926
Related income tax benefit		185		110

As of March 31, 2013, we had total unrecognized compensation cost related to restricted share units, or RSUs, performance-based restricted share units, or performance RSUs, and stock options of $21,048, $10,372 and $6,453, respectively. Those amounts are expected to be recognized as expense over a weighted-average period of approximately two years.

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We estimate the fair value of RSU awards using the market price of our shares on the date of grant. We then recognize the fair value of each RSU award as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period).

Under our performance RSU awards, the number of restricted share units that ultimately vest depend on our share price performance against specified performance goals, which are defined in our performance RSU award agreements. We estimate the grant date fair value of each performance RSU award using a Monte Carlo valuation model. We then recognize the fair value of each performance RSU award as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period).

We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model. We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

• Expected volatility – we estimate the volatility of our share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. We believe using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility.

• Expected term – we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.”

• Risk-free interest rate – we estimate the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.

• Dividends – we use an expected dividend yield of zero because we have not declared or paid a cash dividend since July 2001 and we do not have any plans to declare or pay any cash dividends.

Our share-based compensation plans include a “change in control” provision, which provides for cash redemption of equity awards issued thereunder in certain limited circumstances. In accordance with Securities and Exchange Commission Accounting Series Release No. 268, “Presentation in Financial Statements of Redeemable Preferred Stocks,” we present the redemption amount of these equity awards as temporary equity on the consolidated balance sheet as the equity award is amortized during the vesting period. The redemption amount represents the intrinsic value of the equity award on the grant date. In accordance with current accounting guidance regarding the classification and measurement of redeemable securities, we do not adjust the redemption amount each reporting period unless and until it becomes probable that the equity awards will become redeemable (upon a change in control event). Upon vesting of the equity awards, we reclassify the intrinsic value of the equity awards, as determined on the grant date, to permanent equity.

Reconciliations of temporary equity for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,
	2013			2012
Balance at beginning of year	$	8,594		$	4,993
Compensation cost during the period for those equity awards with intrinsic value on the grant date		3,392			3,058
Intrinsic value of equity awards vested during the period for those equity awards with intrinsic value on the grant date		(3,794	)		(1,756	)
Balance at end of period	$	8,192		$	6,295

Our articles of association provide for conditional capital for the issuance of shares under our share-based compensation plans and other convertible or exercisable securities we may issue in the future. Conditional capital decreases upon issuance of shares in connection with the exercise of outstanding stock options or vesting of restricted awards, with an offsetting increase to our issued and authorized share capital. As of March 31, 2013, our remaining available conditional capital was 59,197,513 shares.

10. Income Taxes

Although we are a Swiss corporation, our shares are listed on a U.S. exchange; therefore, we reconcile our effective tax rate to the U.S. federal statutory rate of 35% to facilitate meaningful comparison with peer companies in the U.S. capital markets. Our effective tax rate can fluctuate significantly from period to period and may differ considerably from the U.S. federal statutory rate as a result of (i) income taxed in various non-U.S. jurisdictions with rates different from the U.S. statutory rate, (ii) our inability to recognize a tax benefit for losses generated by certain unprofitable operations and (iii) the varying mix of income earned in the jurisdictions in which we operate. In addition, our deferred tax assets are reduced by a valuation allowance when, based upon available evidence, it is

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more likely than not that the tax benefit of loss carryforwards (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pre-tax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate. Conversely, in periods when operating units subject to a valuation allowance generate pre-tax losses, the corresponding increase in the valuation allowance has an unfavorable impact on our effective tax rate.

Effective Tax Rate for 2013

Our effective tax rate for the first three months of 2013 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following:

• Income earned in non-U.S. jurisdictions which is expected to contribute to an approximate 17-percentage point reduction in our effective tax rate for the full year 2013, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items; and

• A valuation allowance increase because we are unable to recognize a tax benefit for losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which is expected to contribute to an approximate six-percentage point increase in our effective tax rate for the full year 2013.

Effective Tax Rate for 2012

Our effective tax rate for the first three months of 2012 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following:

• Income earned in non-U.S. jurisdictions which contributed to an approximate 16-percentage point reduction in our effective tax rate, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items; and

• A valuation allowance increase because we were unable to recognize a tax benefit for year-to-date losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which contributed to an approximate three-percentage point increase in our effective tax rate for 2012.

We monitor the jurisdictions for which valuation allowances against deferred tax assets were established in previous years, and we evaluate, on a quarterly basis, the need for the valuation allowances against deferred tax assets in those jurisdictions. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary.

The majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until 2026 and beyond, based on current tax laws.

Our subsidiaries file income tax returns in many tax jurisdictions, including the U.S., several U.S. states and numerous non-U.S. jurisdictions around the world. Tax returns are also filed in jurisdictions where our subsidiaries execute project-related work. The statute of limitations varies by jurisdiction. Because of the number of jurisdictions in which we file tax returns, in any given year the statute of limitations in a number of jurisdictions may expire within 12 months from the balance sheet date. As a result, we expect recurring changes in unrecognized tax benefits due to the expiration of the statute of limitations, none of which are expected to be individually significant. With few exceptions, we are no longer subject to U.S. (including federal, state and local) or non-U.S. income tax examinations by tax authorities for years before 2008.

A number of tax years are under audit by the relevant tax authorities in various jurisdictions, including the U.S. and several states within the U.S. We anticipate that several of these audits may be concluded in the foreseeable future, including in the remainder of 2013. Based on the status of these audits, it is reasonably possible that the conclusion of the audits may result in a reduction of unrecognized tax benefits. However, it is not possible to estimate the magnitude of any such reduction at this time. We recognize interest accrued on the unrecognized tax benefits in interest expense and penalties on the unrecognized tax benefits in other deductions, net on our consolidated statement of operations.

11. Business Segments

We operate through two operating segments, or groups: our Global E&C Group and our Global Power Group.

Global E&C Group

Our Global E&C Group, which operates worldwide, designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related

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infrastructure, including power generation facilities, distribution facilities, gasification facilities and processing facilities associated with the metals and mining sector. Our Global E&C Group is also involved in the design of facilities in developing market sectors, including carbon capture and storage, solid fuel-fired integrated gasification combined-cycle power plants, coal-to-liquids, coal-to-chemicals and biofuels. Additionally, our Global E&C Group is also involved in the development, engineering, construction, ownership and operation of power generation facilities, from conventional and renewable sources, and of waste-to-energy facilities. Our Global E&C Group generates revenues from design, engineering, procurement, construction and project management activities pursuant to contracts which generally span up to approximately four years in duration and from returns on its equity investments in various power production facilities.

Global Power Group

Our Global Power Group designs, manufactures and erects steam generating and auxiliary equipment for electric power generating stations, district heating and industrial facilities worldwide. Additionally, our Global Power Group owns and operates a waste-to-energy facility; holds a controlling interest and operates a combined-cycle gas turbine facility; owns a noncontrolling interest in a petcoke-fired circulating fluidized-bed facility for refinery steam and power generation; and operates a university cogeneration power facility for steam/electric generation. Our Global Power Group generates revenues from engineering activities, equipment supply, construction contracts, operating and maintenance agreements, royalties from licensing its technology, and from returns on its investments in various power production facilities.

Our Global Power Group’s steam generating equipment includes a broad range of steam generation and environmental technologies, offering independent power producers, utilities, municipalities and industrial clients high-value technology solutions for converting a wide range of fuels, such as coal, lignite, petroleum coke, oil, gas, solar, biomass, municipal solid waste and waste flue gases into steam, which can be used for power generation, district heating or industrial processes.

Corporate and Finance Group

In addition to our Global E&C Group and Global Power Group, which represent two of our operating segments for financial reporting purposes, we report the financial results associated with the management of entities which are not managed by one of our two business groups, which include corporate center expenses, our captive insurance operation and expenses related to certain legacy liabilities, such as asbestos, in the Corporate and Finance Group, which also represents an operating segment for financial reporting purposes and which we refer to as the C&F Group.

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Operating Revenues

We conduct our business on a global basis. Operating revenues by industry, operating segment and geographic regions, based upon where our projects are being executed, were as follows:

	Three Months Ended March 31,
	2013		2012
Operating Revenues (Third-Party) by Industry:
Power generation	$	182,464	$	252,115
Oil refining		323,738		325,161
Pharmaceutical		37,846		12,979
Oil and gas		85,258		231,551
Chemical/petrochemical		102,179		68,320
Power plant operation and maintenance		50,771		29,280
Environmental		1,224		2,188
Other, net of eliminations		12,808		11,502
Total	$	796,288	$	933,096
Operating Revenues (Third-Party) by Business Segment:
Global E&C Group	$	587,974	$	670,873
Global Power Group		208,314		262,223
Total	$	796,288	$	933,096
Operating Revenues (Third-Party) by Geographic Region
Africa	$	18,912	$	22,752
Asia Pacific		193,013		405,672
Europe		188,189		218,777
Middle East		64,923		48,284
North America		247,738		158,491
South America		83,513		79,120
Total	$	796,288	$	933,096

EBITDA

EBITDA is the primary measure of operating performance used by our chief operating decision maker. We define EBITDA as net income attributable to Foster Wheeler AG before interest expense, income taxes, depreciation and amortization.

A reconciliation of EBITDA to net income attributable to Foster Wheeler AG is shown below:

	Three Months Ended March 31,
	2013			2012
EBITDA:
Global E&C Group	$	35,188		$	46,928
Global Power Group		24,728			52,316
C&F Group *		(19,797	)		(27,278	)
Total		40,119			71,966
Add: Net income attributable to noncontrolling interests		3,279			2,397
Less: Interest expense		2,672			3,416
Less: Depreciation and amortization**		19,261			13,020
Income before income taxes		21,465			57,927
Less: Provision for income taxes		5,160			14,884
Net income		16,305			43,043
Less: Net income attributable to noncontrolling interests		3,279			2,397
Net income attributable to Foster Wheeler AG	$	13,026		$	40,646

* Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest.

** Depreciation expense for the three months ended March 31, 2013 included an impairment charge of $3,919 recognized in connection with our Camden, New Jersey waste-to-energy facility within our Global Power Group business segment. Please refer to the description below for further information.

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EBITDA in the above table includes the following:

	Three Months Ended March 31,
	2013		2012
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions:(1)
Global E&C Group	$	10,500	$	3,800
Global Power Group(2)		8,500		10,300
Total	$	19,000	$	14,100
Net asbestos-related provision in our C&F Group(3)	$	2,000	$	2,000
Charges for severance-related postemployment benefits:
Global E&C Group	$	1,200	$	-
Global Power Group		400		-
C&F Group		400		-
Total	$	2,000	$	-

(1) Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 for further information regarding changes in our final estimated contract profit.

(2) The changes in final estimated contract profit revisions for our Global Power Group were increased during the three months ended March 31, 2012 for a favorable settlement with a subcontractor of approximately $6,900.

(3) Please refer to Note 12 for further information regarding the revaluation of our asbestos liability and related asset.

The accounting policies of our business segments are the same as those described in our summary of significant accounting policies as disclosed in our 2012 Form 10-K. The only significant intersegment transactions relate to interest on intercompany balances. We account for interest on those arrangements as if they were third-party transactions (i.e., at current market rates) and we include the elimination of that activity in the results of the C&F Group.

During the three months ended March 31, 2013, we recorded an impairment charge of $3,919 at our Camden, New Jersey waste-to-energy facility within our Global Power Group business segment. This charge was in addition to an impairment charge of $11,455 recorded during the fourth quarter of 2012. The impairment charges in both periods included estimates related to the continued operation of the facility and potential sale of the facility. The charge in the three months ended March 31, 2013 was the result of updating our estimate related to the potential sale of the facility and the impairment charge was recorded as depreciation expense within cost of operating revenues on our consolidated statement of operations. After recording the impairment charge and after approval of the plan to sell the facility, discussed below, the carrying value of the facility’s fixed assets approximated fair value.

On April 17, 2013, our Board of Directors approved a plan to sell our waste-to-energy facility in Camden, New Jersey. We currently anticipate completing the sale within one year. As a result of our Board of Director’s decision on April 17, 2013, the Camden facility’s assets have been classified as held for sale, subsequent to the March 31, 2013 balance sheet date, and will be classified as discontinued operations in our financial statements in subsequent periods.

12. Litigation and Uncertainties

Asbestos

Some of our U.S. and U.K. subsidiaries are defendants in numerous asbestos-related lawsuits and out-of-court informal claims pending in the U.S. and the U.K. Plaintiffs claim damages for personal injury alleged to have arisen from exposure to or use of asbestos in connection with work allegedly performed by our subsidiaries during the 1970s and earlier.

United States

A summary of our U.S. claim activity is as follows:

	Three Months Ended March 31,
	2013			2012
Number of Claims by period:
Open claims at beginning of period		125,310			124,540
New claims		1,210			1,160
Claims resolved		(1,040	)		(1,420	)
Open claims at end of period		125,480			124,280

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We had the following U.S. asbestos-related assets and liabilities recorded on our consolidated balance sheet as of the dates set forth below. Total U.S. asbestos-related liabilities are estimated through the first quarter of 2028. Although it is likely that claims will continue to be filed after that date, the uncertainties inherent in any long-term forecast prevent us from making reliable estimates of the indemnity and defense costs that might be incurred after that date.

United States Asbestos	March 31, 2013		December 31, 2012
Asbestos-related assets recorded within:
Accounts and notes receivable-other	$	24,738	$	33,626
Asbestos-related insurance recovery receivable		102,893		102,751
Total asbestos-related assets	$	127,631	$	136,377
Asbestos-related liabilities recorded within:
Accrued expenses	$	41,875	$	47,900
Asbestos-related liability		220,909		227,400
Total asbestos-related liabilities	$	262,784	$	275,300
Liability balance by claim category:
Open claims	$	41,322	$	42,700
Future unasserted claims		221,462		232,600
Total asbestos-related liabilities	$	262,784	$	275,300

We have worked with Analysis, Research & Planning Corporation, or ARPC, nationally recognized consultants in the U.S. with respect to projecting asbestos liabilities, to estimate the amount of asbestos-related indemnity and defense costs at each year-end based on a forecast for the next 15 years. Each year we have recorded our estimated asbestos liability at a level consistent with ARPC’s reasonable best estimate. Our estimated asbestos liability decreased during the first three months of 2013 as a result of indemnity and defense cost payments totaling approximately $14,600, partially offset by an increase of $2,000 related to the accrual of our rolling 15-year asbestos-related liability estimate. The total asbestos-related liabilities are comprised of our estimates for our liability relating to open (outstanding) claims being valued and our liability for future unasserted claims through the first quarter of 2028.

Our liability estimate is based upon the following information and/or assumptions: number of open claims, forecasted number of future claims, estimated average cost per claim by disease type – mesothelioma, lung cancer and non-malignancies – and the breakdown of known and future claims into disease type – mesothelioma, lung cancer and non-malignancies, as well as other factors. The total estimated liability, which has not been discounted for the time value of money, includes both the estimate of forecasted indemnity amounts and forecasted defense costs. Total defense costs and indemnity liability payments are estimated to be incurred through the first quarter of 2028, during which period the incidence of new claims is forecasted to decrease each year. We believe that it is likely that there will be new claims filed after the first quarter of 2028, but in light of uncertainties inherent in long-term forecasts, we do not believe that we can reasonably estimate the indemnity and defense costs that might be incurred after the first quarter of 2028.

Through March 31, 2013, total cumulative indemnity costs paid, prior to insurance recoveries, were approximately $805,000 and total cumulative defense costs paid were approximately $393,900, or approximately 33% of total defense and indemnity costs. The overall historic average combined indemnity and defense cost per resolved claim through March 31, 2013 has been approximately $3.2. The average cost per resolved claim is increasing and we believe it will continue to increase in the future.

Over the last several years, certain of our subsidiaries have entered into settlement agreements calling for insurers to make lump-sum payments, as well as payments over time, for use by our subsidiaries to fund asbestos-related indemnity and defense costs and, in certain cases, for reimbursement for portions of out-of-pocket costs previously incurred. As our subsidiaries reach agreements with their insurers to settle their disputed asbestos-related insurance coverage, we increase our asbestos-related insurance asset and record settlement gains.

Asbestos-related assets under executed settlement agreements with insurers due in the next 12 months are recorded within accounts and notes receivable-other and amounts due beyond 12 months are recorded within asbestos-related insurance recovery receivable. Asbestos-related insurance recovery receivable also includes our best estimate of actual and probable insurance recoveries relating to our liability for pending and estimated future asbestos claims through the first quarter of 2028. Our asbestos-related assets have not been discounted for the time value of money.

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Our insurance recoveries may be limited by future insolvencies among our insurers. Other than receivables related to bankruptcy court-approved settlements during liquidation proceedings, we have not assumed recovery in the estimate of our asbestos-related insurance asset from any of our currently insolvent insurers. We have considered the financial viability and legal obligations of our subsidiaries’ insurance carriers and believe that the insurers or their guarantors will continue to reimburse a significant portion of claims and defense costs relating to asbestos litigation. As of March 31, 2013 and December 31, 2012, we have not recorded an allowance for uncollectible balances against our asbestos-related insurance assets. We write off receivables from insurers that have become insolvent; there were no such write-offs during the three months ended March 31, 2013 and 2012. Insurers may become insolvent in the future and our insurers may fail to reimburse amounts owed to us on a timely basis. If we fail to realize the expected insurance recoveries, or experience delays in receiving material amounts from our insurers, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our net asbestos-related provision during the three months ended March 31, 2013 and 2012 was $2,000 and $1,997, respectively, and the provision in each period was the result of the accrual of our rolling 15-year asbestos liability estimate.

The following table summarizes our approximate asbestos-related payments and insurance proceeds:

	Three Months Ended March 31,
	2013			2012
Asbestos litigation, defense and case resolution payments	$	14,600		$	15,300
Insurance proceeds		(8,900	)		(10,500	)
Net asbestos-related payments	$	5,700		$	4,800

We expect to have net cash outflows of $14,700 during the full year 2013 as a result of asbestos liability indemnity and defense payments in excess of insurance proceeds. This estimate assumes no settlements with insurance companies and no elections by us to fund additional payments. As we continue to collect cash from insurance settlements and assuming no increase in our asbestos-related insurance liability, the asbestos-related insurance receivable recorded on our consolidated balance sheet will continue to decrease.

The estimate of the liabilities and assets related to asbestos claims and recoveries is subject to a number of uncertainties that may result in significant changes in the current estimates. Among these are uncertainties as to the ultimate number and type of claims filed, the amounts of claim costs, the impact of bankruptcies of other companies with asbestos claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, as well as potential legislative changes. Increases in the number of claims filed or costs to resolve those claims could cause us to increase further the estimates of the costs associated with asbestos claims and could have a material adverse effect on our financial condition, results of operations and cash flows.

Based on our December 31, 2012 liability estimate, an increase of 25% in the average per claim indemnity settlement amount would increase the liability by $42,000 and the impact on expense would be dependent upon available additional insurance recoveries. Assuming no change to the assumptions currently used to estimate our insurance asset, this increase would result in a charge on our consolidated statement of operations of approximately 85% of the increase in the liability. Long-term cash flows would ultimately change by the same amount. Should there be an increase in the estimated liability in excess of 25%, the percentage of that increase that would be expected to be funded by additional insurance recoveries will decline.

United Kingdom

Some of our subsidiaries in the U.K. have also received claims alleging personal injury arising from exposure to asbestos. To date, 1,026 claims have been brought against our U.K. subsidiaries, of which 299 remained open as of March 31, 2013. None of the settled claims have resulted in material costs to us.

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The following table summarizes our asbestos-related liabilities and assets for our U.K. subsidiaries based on open (outstanding) claims and our estimate for future unasserted claims through the first quarter of 2028:

United Kingdom Asbestos	March 31, 2013		December 31, 2012
Asbestos-related assets:
Accounts and notes receivable-other	$	961	$	1,022
Asbestos-related insurance recovery receivable		27,541		29,687
Total asbestos-related assets	$	28,502	$	30,709
Asbestos-related liabilities:
Accrued expenses	$	961	$	1,022
Asbestos-related liability		29,669		31,950
Total asbestos-related liabilities	$	30,630	$	32,972
Liability balance by claim category:
Open claims	$	7,004	$	7,843
Future unasserted claims		23,626		25,129
Total asbestos-related liabilities	$	30,630	$	32,972

The liability estimates are based on a U.K. House of Lords judgment that pleural plaque claims do not amount to a compensable injury and accordingly, we have reduced our liability assessment. If this ruling is reversed by legislation, the total asbestos liability recorded in the U.K. would increase to approximately $43,300, with a corresponding increase in the asbestos-related asset.

Project Claims

In addition to the specific matter described below, in the ordinary course of business, we are parties to litigation involving clients and subcontractors arising out of project contracts. Such litigation includes claims and counterclaims by and against us for canceled contracts, for additional costs incurred in excess of current contract provisions, as well as for back charges for alleged breaches of warranty and other contract commitments. If we were found to be liable for any of the claims/counterclaims against us, we would incur a charge against earnings to the extent a reserve had not been established for the matter in our accounts or if the liability exceeds established reserves.

Due to the inherent commercial, legal and technical uncertainties underlying the estimation of our project claims, the amounts ultimately realized or paid by us could differ materially from the balances, if any, included in our financial statements, which could result in additional material charges against earnings, and which could also materially adversely impact our financial condition and cash flows.

Power Plant Arbitration – United States

In June 2011, a demand for arbitration was filed with the American Arbitration Association by our client’s erection contractor against our client and us in connection with a power plant project in the U.S. At that time, no details of the erection contractor’s claims were included with the demand. The arbitration panel was formed on September 26, 2012 and a detailed Statement of Claim from the erection contractor was delivered to the panel on October 24, 2012. According to the claim, the erection contractor is seeking unpaid contract amounts from our client and additional compensation from our client and us for alleged delays, disruptions, inefficiencies, and extra work in connection with the erection of the plant. We supplied the steam generation equipment for the project under contract with our client, the power plant owner. The turbine contractor, who supplied the turbine, electricity generator and other plant equipment under a separate contract with the power plant owner, has also been included as a party in the arbitration. The erection contractor is seeking approximately $240,000 in damages, exclusive of interest, from our client. Of this amount, the statement of claim asserts that approximately $150,000 is related to the steam generation equipment, and alleges failure on our part in connection with our performance under our steam generation equipment supply contract; those damages are claimed jointly against us and our client, the power plant owner. The claims against us by the erection contractor allege negligence and, in its purported capacity as a third party beneficiary and assignee of our steam generation equipment supply contract, breach of contract.

Responsive pleadings to the erection contractor’s pleading were filed by the other parties, including us, on November 28, 2012. Our pleading denies the erection contractor’s claims against us and asserts cross claims against our client seeking over $14,800 in damages related to delays, out of scope work, and improperly assessed delay liquidated damages. In its pleading, the turbine contractor asserts claims against our client for unpaid contract amounts and additional compensation for extra work and delays. In its capacity as a purported co-assignee of the steam generation equipment supply contract, the turbine contractor joins in the erection contractor’s claims against

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us for delay-related damages and asserts cross claims against us seeking over $5,000 in non-delay related damages. In its pleading, our client asserts counter and cross claims for breach of contract and gross negligence against the erection contractor and the turbine contractor. Our client also asserts cross claims against us for any damages our client has incurred, and for indemnification of any damages our client may be required to pay to the erection and turbine contractors, arising out of alleged failures of performance on our part under our steam generation supply contract. We have denied our client’s and the turbine contractor’s cross claims against us. The arbitration proceedings are expected to run through the end of 2014, if not longer. We cannot predict the ultimate outcome of this matter at this time.

Environmental Matters

CERCLA and Other Remedial Matters

Under U.S. federal statutes, such as the Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), the Clean Water Act and the Clean Air Act, and similar state laws, the current owner or operator of real property and the past owners or operators of real property (if disposal of toxic or hazardous substances took place during such past ownership or operation) may be jointly and severally liable for the costs of removal or remediation of toxic or hazardous substances on or under their property, regardless of whether such materials were released in violation of law or whether the owner or operator knew of, or was responsible for, the presence of such substances. Moreover, under CERCLA and similar state laws, persons who arrange for the disposal or treatment of hazardous or toxic substances may also be jointly and severally liable for the costs of the removal or remediation of such substances at a disposal or treatment site, whether or not such site was owned or operated by such person, which we refer to as an off-site facility. Liability at such off-site facilities is typically allocated among all of the financially viable responsible parties based on such factors as the relative amount of waste contributed to a site, toxicity of such waste, relationship of the waste contributed by a party to the remedy chosen for the site and other factors.

We currently own and operate industrial facilities and we have also transferred our interests in industrial facilities that we formerly owned or operated. It is likely that as a result of our current or former operations, hazardous substances have affected the facilities or the real property on which they are or were situated. We also have received and may continue to receive claims pursuant to indemnity obligations from the present owners of facilities we have transferred, which claims may require us to incur costs for investigation and/or remediation.

We are currently engaged in the investigation and/or remediation under the supervision of the applicable regulatory authorities at four of our or our subsidiaries’ former facilities (including Mountain Top, which is described below). In addition, we sometimes engage in investigation and/or remediation without the supervision of a regulatory authority. Although we do not expect the environmental conditions at our present or former facilities to cause us to incur material costs in excess of those for which reserves have been established, it is possible that various events could cause us to incur costs materially in excess of our present reserves in order to fully resolve any issues surrounding those conditions. Further, no assurance can be provided that we will not discover additional environmental conditions at our currently or formerly owned or operated properties, or that additional claims will not be made with respect to formerly owned properties, requiring us to incur material expenditures to investigate and/or remediate such conditions.

We have been notified that we are a potentially responsible party (“PRP”) under CERCLA or similar state laws at three off-site facilities. At each of these sites, our liability should be substantially less than the total site remediation costs because the percentage of waste attributable to us compared to that attributable to all other PRPs is low. We do not believe that our share of cleanup obligations at any of the off-site facilities as to which we have received a notice of potential liability will exceed $500 in the aggregate. We have also received and responded to a request for information from the United States Environmental Protection Agency (“USEPA”) regarding a fourth off-site facility. We do not know what, if any, further actions USEPA may take regarding this fourth off-site facility.

Mountain Top

In February 1988, one of our subsidiaries, Foster Wheeler Energy Corporation (“FWEC”), entered into a Consent Agreement and Order with the USEPA and the Pennsylvania Department of Environmental Protection (“PADEP”) regarding its former manufacturing facility in Mountain Top, Pennsylvania. The order essentially required FWEC to investigate and remediate as necessary contaminants, including trichloroethylene (“TCE”), in the soil and groundwater at the facility. Pursuant to the order, in 1993 FWEC installed a “pump and treat” system to remove TCE from the groundwater. It is not possible at the present time to predict how long FWEC will be required to operate and maintain this system.

In the fall of 2004, FWEC sampled the private domestic water supply wells of certain residences in Mountain Top and identified approximately 30 residences whose wells contained TCE at levels in excess of Safe Drinking Water Act standards. The subject residences are located approximately one mile to the southwest of where the TCE

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previously was discovered in the soils at the former FWEC facility. Since that time, FWEC, USEPA and PADEP have cooperated in responding to the foregoing. Although FWEC believed the evidence available was not sufficient to support a determination that FWEC was responsible for the TCE in the residential wells, FWEC immediately provided the affected residences with bottled water, followed by water filters, and, pursuant to a settlement agreement with USEPA, it hooked them up to the public water system. Pursuant to an amendment of the settlement agreement, FWEC subsequently agreed with USEPA to arrange and pay for the hookup of several additional residences, even though TCE has not been detected in the wells at those residences. The hookups to the agreed upon residences have been completed, and USEPA has provided FWEC with a certificate that FWEC has completed its obligations related to the above-described settlement agreement (as amended). FWEC may be required to pay the agencies’ costs in overseeing and responding to the situation.

FWEC is also incurring further costs in connection with a Remedial Investigation / Feasibility Study (“RI/FS”) that in March 2009 it agreed to conduct. During the fourth quarter of 2012, FWEC received a USEPA demand under the foregoing agreement for payment of $1,040 of response costs USEPA claims it incurred from the commencement of the RI/FS in April 2009 through February 2012. FWEC is preparing a response to the demand. In April 2009, USEPA proposed for listing on the National Priorities List (“NPL”) an area consisting of FWEC’s former manufacturing facility and the affected residences, but it also stated that the proposed listing may not be finalized if FWEC complies with its agreement to conduct the RI/FS. FWEC submitted comments opposing the proposed listing.

FWEC has accrued its best estimate of the cost of all of the foregoing, and it reviews this estimate on a quarterly basis.

Other costs to which FWEC could be exposed could include, among other things, FWEC’s counsel and consulting fees, further agency oversight and/or response costs, costs and/or exposure related to potential litigation, and other costs related to possible further investigation and/or remediation. At present, it is not possible to determine whether FWEC will be determined to be liable for some or all of the items described in this paragraph or to reliably estimate the potential liability associated with the items. If one or more third-parties are determined to be a source of the TCE, FWEC will evaluate its options regarding the potential recovery of the costs FWEC has incurred, which options could include seeking to recover those costs from those determined to be a source.

Other Environmental Matters

Our operations, especially our manufacturing and power plants, are subject to comprehensive laws adopted for the protection of the environment and to regulate land use. The laws of primary relevance to our operations regulate the discharge of emissions into the water and air, but can also include hazardous materials handling and disposal, waste disposal and other types of environmental regulation. These laws and regulations in many cases require a lengthy and complex process of obtaining licenses, permits and approvals from the applicable regulatory agencies. Noncompliance with these laws can result in the imposition of material civil or criminal fines or penalties. We believe that we are in substantial compliance with existing environmental laws. However, no assurance can be provided that we will not become the subject of enforcement proceedings that could cause us to incur material expenditures. Further, no assurance can be provided that we will not need to incur material expenditures beyond our existing reserves to make capital improvements or operational changes necessary to allow us to comply with future environmental laws.

With regard to the foregoing, the waste-to-energy facility operated by our Camden County Energy Recovery Associates, LP (“CCERA”) project subsidiary is subject to certain revisions to New Jersey’s mercury air emission regulations. The revisions made CCERA’s mercury control requirements more stringent, especially when the last phase of the revisions became effective on January 3, 2012. CCERA’s management believes that the data generated during stack testing in 2012 and the several prior years tends to indicate that the facility will be able to comply with even the most stringent of the regulatory revisions without installing additional control equipment. Estimates of the cost of installing the additional control equipment are approximately $30,000 based on our last assessment.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(amounts in thousands of dollars, except share data and per share amounts)

The following is management’s discussion and analysis of certain significant factors that have affected our financial condition and results of operations for the periods indicated below. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2012, which we refer to as our 2012 Form 10-K.

Safe Harbor Statement

This management’s discussion and analysis of financial condition and results of operations, other sections of this quarterly report on Form 10-Q and other reports and oral statements made by our representatives from time to time may contain forward-looking statements that are based on our assumptions, expectations and projections about Foster Wheeler AG and the various industries within which we operate. These include statements regarding our expectations about revenues (including as expressed by our backlog), our liquidity, the outcome of litigation and legal proceedings and recoveries from customers for claims, and the costs of current and future asbestos claims and the amount and timing of related insurance recoveries. Such forward-looking statements by their nature involve a degree of risk and uncertainty. We caution that a variety of factors, including but not limited to the factors described in Part I, Item 1A, “Risk Factors,” in our 2012 Form 10-K, which we filed with the Securities and Exchange Commission, or SEC, on March 1, 2013, the factors described in Part II, Item 1A, “Risk Factors,” in this quarterly report on Form 10-Q, and the following, could cause business conditions and our results to differ materially from what is contained in forward-looking statements:

• benefits, effects or results of our redomestication to Switzerland;

• benefits, effects or results of our strategic renewal initiative;

• further deterioration in global economic conditions;

• changes in investment by the oil and gas, oil refining, chemical/petrochemical and power generation industries;

• changes in the financial condition of our customers;

• changes in regulatory environments;

• changes in project design or schedules;

• contract cancellations;

• changes in our estimates of costs to complete projects;

• changes in trade, monetary and fiscal policies worldwide;

• compliance with laws and regulations relating to our global operations;

• currency fluctuations;

• war, terrorist attacks and/or natural disasters affecting facilities either owned by us or where equipment or services are or may be provided by us;

• interruptions to shipping lanes or other methods of transit;

• outcomes of pending and future litigation, including litigation regarding our liability for damages and insurance coverage for asbestos exposure;

• protection and validity of our patents and other intellectual property rights;

• increasing global competition;

• compliance with our debt covenants;

• recoverability of claims against our customers and others by us and claims by third parties against us; and

• changes in estimates used in our critical accounting policies.

Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us.

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In addition, this management’s discussion and analysis of financial condition and results of operations contains several statements regarding current and future general global economic conditions. These statements are based on our compilation of economic data and analyses from a variety of external sources. While we believe these statements to be reasonably accurate, global economic conditions are difficult to analyze and predict and are subject to significant uncertainty and as a result, these statements may prove to be wrong. The challenges and drivers for each of our business segments are discussed in more detail in the section entitled “—Results of Operations-Business Segments,” within this Item 2.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K filed or furnished with the SEC.

Overview

We operate through two business groups – the Global Engineering & Construction Group, which we refer to as our Global E&C Group, and our Global Power Group. In addition to these two business groups, we also report corporate center expenses, our captive insurance operation and expenses related to certain legacy liabilities, such as asbestos and other expenses, in the Corporate and Finance Group, which we refer to as our C&F Group.

We have been exploring, and intend to continue to explore, acquisitions within the engineering and construction industry to strategically complement or expand on our Global E&C Group’s technical capabilities or access to new market segments. During our U.S. operations’ fiscal first quarter of 2013, we acquired a U.S.-based firm that specializes in the management of construction and commissioning of pharmaceutical and biotech facilities and which also has the capabilities to manage the full engineering, procurement and construction of such facilities. In addition, in November 2012, we acquired all of the outstanding shares of a privately held multi-discipline full service engineering, procurement, and construction management company located in North America. The results of operations of these acquired businesses have been included in our Global E&C Group. We are also exploring acquisitions within the power generation industry to complement the products which our Global Power Group offers. There is no assurance that we will consummate any acquisitions in the future. Please refer to Note 2 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our acquisition activities in 2013 and 2012.

Summary Financial Results for the Three Months Ended March 31, 2013 and 2012

Our summary financial results for the three months ended March 31, 2013 and 2012 are as follows:

	Three Months Ended March 31,
	2013			2012
Consolidated Statement of Operations Data:
Operating revenues(1)	$	796,288		$	933,096
Contract profit(1)		115,709			139,332
Selling, general and administrative expenses(1)		90,473			83,281
Net income attributable to Foster Wheeler AG	$	13,026		$	40,646
Earnings per share :
Basic	$	0.12		$	0.38
Diluted	$	0.12		$	0.38
Net cash used in operating activities(2)	$	(36,445	)	$	(70,028	)

⁽¹⁾  Please refer to the section entitled “—Results of Operations” within this Item 2 for further discussion.

⁽²⁾  Please refer to the section entitled “—Liquidity and Capital Resources” within this Item 2 for further discussion.

Cash and cash equivalents totaled $475,716 and $582,322 as of March 31, 2013 and December 31, 2012, respectively.

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Net income attributable to Foster Wheeler AG decreased in the first three months of 2013, compared to the same period of 2012. This decrease was primarily driven by the pre-tax decrease in contract profit of $19,500, which excluded the increase in net foreign exchange transaction losses and the impact of our two business acquisitions discussed above. The decrease in net income attributable to Foster Wheeler AG also includes the aggregate impact of an increase in net foreign exchange transaction losses of $11,100, which were recognized in cost of operating revenues and other deductions, net of $7,300 and $3,800, respectively. The above decreases were partially offset by the favorable impact of our two business acquisitions discussed above.

Please refer to the discussion within the section entitled “—Results of Operations” within this Item 2.

Challenges and Drivers

Our primary operating focus continues to be booking quality new business and effectively and efficiently executing our contracts. The global markets in which we operate are largely dependent on overall economic conditions and global or regional economic growth rates and the resultant demand for oil and gas, electric power, petrochemicals and refined products. Both of our business groups have been impacted by unfavorable economic growth rates in most of their respective global markets in recent years. Additionally, there is potential downside risk to continued unfavorable global economic growth rates driven primarily by continued sovereign debt and bank funding pressures in the Eurozone, the speed at which governmental efforts directed at spending and debt reduction are being implemented, a slowdown in the economic growth rate in China and geopolitical oil supply risks, which could impact global economic growth through a significant rise in oil prices. If these risks materialize, both of our business groups could be impacted.

In the engineering and construction industry, we expect long-term demand to be strong for the end products produced by our clients, and we believe that this long-term demand will continue to stimulate investment by our clients in new, expanded and upgraded facilities. Our clients plan their investments based on long-term time horizons. We believe that global demand for energy, chemicals and pharmaceuticals will continue to grow over the long-term and that clients will continue to invest in new and upgraded capacity to meet that demand. Global markets in the engineering and construction industry have experienced intense competition among engineering and construction contractors and pricing pressure for contracts awarded. We have seen instances of protracted client bidding and contract award processes and some clients have been releasing, and we expect will continue to release, tranches of work on a piecemeal basis. However, we are seeing clients continuing to develop new projects and, after making final investment decisions, moving forward with previously planned projects. The challenges and drivers for our Global E&C Group are discussed in more detail in the section entitled “—Results of Operations-Business Segments-Global E&C Group-Overview of Segment,” within this Item 2.

We believe that a gradual upturn in global economic growth will begin during 2013, which we further believe will improve demand for the products and services of our Global Power Group in 2013, compared to 2012. However, a number of constraining market factors continue to impact the markets that we serve. These factors include political and environmental sensitivity regarding coal-fired steam generators, particularly in the U.S. and Western Europe, and the outlook for continued lower natural gas pricing over the next three to five years, which has increased the attractiveness of natural gas, in relation to coal and renewables, for the generation of electricity. In addition, the constraints on the global credit market may continue to impact some of our clients’ investment plans as these clients are affected by the availability and cost of financing, as well as their own financial strategies, which could include cash conservation. These factors may continue in the future. The challenges and drivers for our Global Power Group are discussed in more detail in the section entitled “—Results of Operations-Business Segments-Global Power Group-Overview of Segment,” within this Item 2.

New Orders and Backlog of Unfilled Orders

The tables below summarize our new orders and backlog of unfilled orders by period:

	Three Months Ended
	March 31, 2013		December 31, 2012			March 31, 2012
New orders, measured in future revenues:
Global E&C Group*	$	467,700	$	852,900		$	672,600
Global Power Group		198,900		125,300			161,700
Total*	$	666,600	$	978,200		$	834,300
*  Balancesinclude the following Global E&C Group flow-through revenues, as defined in the section entitled “—Results of Operations-Operating Revenues” within this Item 2:	$	132,200	$	(13,600	)	$	301,600

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	As of
	March 31, 2013		December 31, 2012
Backlog of unfilled orders, measured in future revenues	$	3,460,000	$	3,648,000
Backlog, measured in Foster Wheeler scope*	$	2,765,300	$	2,950,200
Global E&C Group man-hours in backlog (in thousands)		16,200		17,000

* As defined in the section entitled “—Backlog and New Orders” within this Item 2.

Please refer to the section entitled “—Backlog and New Orders” within this Item 2 for further detail.

Results of Operations

Operating Revenues

	Three Months Ended March 31,
	2013		2012		$ Change		% Change
Global E&C Group	$	587,974	$	670,873	$	(82,899)		(12.4)%
Global Power Group		208,314		262,223		(53,909)		(20.6)%
Total	$	796,288	$	933,096	$	(136,808)		(14.7)%

We operate through two business groups: our Global E&C Group and our Global Power Group. Please refer to the section entitled “—Business Segments,” within this Item 2, for a discussion of the products and services of our business segments.

The composition of our operating revenues varies from period to period based on the portfolio of contracts in execution during any given period. Our operating revenues are further dependent upon the strength of the various geographic markets and industries we serve and our ability to address those markets and industries.

Our operating revenues by geographic region, based upon where our projects are being executed, for the three months ended March 31, 2013 and 2012, were as follows:

	Three Months Ended March 31,
	2013		2012		$ Change		% Change
Africa	$	18,912	$	22,752	$	(3,840)		(16.9)%
Asia Pacific		193,013		405,672		(212,659)		(52.4)%
Europe		188,189		218,777		(30,588)		(14.0)%
Middle East		64,923		48,284		16,639		34.5%
North America		247,738		158,491		89,247		56.3%
South America		83,513		79,120		4,393		5.6%
Total	$	796,288	$	933,096	$	(136,808)		(14.7)%

Our operating revenues decreased in the three months ended March 31, 2013, compared to the same period in 2012, primarily as a result of decreased flow-through revenues of $142,000, as described below. The decrease was partially offset by the favorable impact in 2013 related to two businesses acquired by our Global E&C Group subsequent to the three months ended March 31, 2012. Excluding the impact of the change in flow-through revenues, our acquisitions and currency fluctuations, our operating revenues decreased 5% in the three months ended March 31, 2013, compared to the same period in 2012, which was the net result of decreased operating revenues in our Global Power Group, partially offset by increased operating revenues in our Global E&C Group.

Flow-through revenues and costs result when we purchase materials, equipment or third-party services on behalf of our customer on a reimbursable basis with no profit on the materials, equipment or third-party services and where we have the overall responsibility as the contractor for the engineering specifications and procurement or procurement services for the materials, equipment or third-party services included in flow-through costs. Flow-through revenues and costs do not impact contract profit or net earnings.

Please refer to the section entitled “—Business Segments,” within this Item 2, for further discussion related to operating revenues and our view of the market outlook for both of our operating groups.

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Contract Profit

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	115,709	$	139,332	$	(23,623)		(17.0)%

Contract profit is computed as operating revenues less cost of operating revenues. “Flow-through” amounts are recorded both as operating revenues and cost of operating revenues with no contract profit. Contract profit margins are computed as contract profit divided by operating revenues. Flow-through revenues reduce the contract profit margin as they are included in operating revenues without any corresponding impact on contract profit. As a result, we analyze our contract profit margins excluding the impact of flow-through revenues as we believe that this is a more accurate measure of our operating performance.

Contract profit decreased during the three months ended March 31, 2013, compared to the same period in 2012. The decrease was the result of decreased contract profit by both our Global E&C Group and our Global Power Group. The decrease in contract profit in our Global E&C Group included the unfavorable impact related to a change in net foreign exchange transaction gains and losses of $8,600, and the decrease in contract profit in our Global Power Group included an impairment charge of $3,900 recognized during the three months ended March 31, 2013 in connection with our Camden, New Jersey waste-to-energy facility.

Please refer to the section entitled “—Business Segments,” within this Item 2, for further information related to contract profit and contract profit margins for both of our operating groups.

Selling, General and Administrative (SG&A) Expenses

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	90,473	$	83,281	$	7,192		8.6%

SG&A expenses include the costs associated with general management, sales pursuit, including proposal expenses, and research and development costs.

SG&A expenses increased in the first three months of 2013, compared to the same period in 2012, primarily as a result of increased sales pursuit costs of $2,700, additional SG&A expenses related to our two businesses acquired subsequent to the three months ended March 31, 2012 of $2,400, a charge for severance-related postemployment benefits of $1,400 recognized in the first three months of 2013 and increased general overhead costs of $600. The severance-related postemployment benefits charge of $1,400 referenced above included charges in our Global E&C Group and our C&F Group of $1,000 and $400, respectively.

Other Income, net

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	4,751	$	8,184	$	(3,433)		(41.9)%

Other income, net in the three months ended March 31, 2013 consisted primarily of equity earnings of $4,000 generated from our investments, primarily from our ownership interests in build, own and operate projects in Chile and Italy. Our equity earnings from our Global Power Group’s project in Chile were $4,200 during the three months ended March 31, 2013, while equity earnings from our Global E&C Group’s projects in Italy were inconsequential during that period.

Other income, net decreased in the first three months of 2013, compared to the same period in 2012, primarily driven by decreased equity earnings in our Global Power Group’s project in Chile of $3,100.

For further information related to our equity earnings, please refer to the sections within this Item 2 entitled “—Business Segments-Global Power Group” for our Global Power Group’s project in Chile and “—Business Segments-Global E&C Group” for our Global E&C Group’s projects in Italy, as well as Note 3 to the consolidated financial statements included in this quarterly report on Form 10-Q.

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Other Deductions, net

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	5,312	$	4,064	$	1,248		30.7%

Other deductions, net includes various items, such as legal fees, consulting fees, bank fees, net penalties on unrecognized tax benefits and the impact of net foreign exchange transactions within the period. Net foreign exchange transactions include the net amount of transaction losses and gains that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of our subsidiaries. Net foreign exchange transaction gains and losses were primarily driven by exchange rate fluctuations on cash balances held by certain of our subsidiaries that were denominated in a currency other than the functional currency of those subsidiaries.

Other deductions, net in the first three months of 2013 consisted primarily of legal fees of $5,500 and a net foreign exchange transaction loss of $1,300, partially offset by a net benefit for previously accrued tax penalties on unrecognized tax benefits that were ultimately not assessed of $1,300. The increase in other deductions, net in the first three months of 2013, compared to the same period in 2012, was primarily the result of an unfavorable impact of $3,800 related to the change in net foreign exchange transaction gains and losses, partially offset by the favorable change in accrued tax penalties on unrecognized tax benefits of $1,700, which included the net benefit of previously accrued tax penalties on unrecognized tax benefits that were ultimately not assessed during first three months of 2013 of $1,300.

Interest Income

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	1,462	$	3,169	$	(1,707)		(53.9)%

Interest income decreased in the three months ended March 31, 2013, compared to the same period in 2012, primarily as a result of lower average cash and cash equivalents balances and lower investment yields on cash and cash equivalents balances.

Interest Expense

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	2,672	$	3,416	$	(744)		(21.8)%

Interest expense decreased in the three months ended March 31, 2013, compared to the same period in 2012, primarily as a result of the favorable impact from decreased average borrowings, excluding foreign currency translation effects.

Net Asbestos-Related Provision

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	2,000	$	1,997	$	3		N/M

N/M - Not meaningful.

The net asbestos-related provision was relatively unchanged during the first three months of 2013, compared to the same period in 2012.

Provision for Income Taxes

	Three Months Ended March 31,
	2013		2012		$ Change		% Change
Provision for income taxes	$	5,160	$	14,884	$	(9,724)		(65.3)%
Effective tax rate		24.0%		25.7%

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Although we are a Swiss corporation, our shares are listed on a U.S. exchange; therefore, we reconcile our effective tax rate to the U.S. federal statutory rate of 35% to facilitate meaningful comparison with peer companies in the U.S. capital markets. Our effective tax rate can fluctuate significantly from period to period and may differ considerably from the U.S. federal statutory rate as a result of (i) income taxed in various non-U.S. jurisdictions with rates different from the U.S. statutory rate, (ii) our inability to recognize a tax benefit for losses generated by certain unprofitable operations and (iii) the varying mix of income earned in the jurisdictions in which we operate. In addition, our deferred tax assets are reduced by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of loss carryforwards (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pre-tax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate. Conversely, in periods when operating units subject to a valuation allowance generate pre-tax losses, the corresponding increase in the valuation allowance has an unfavorable impact on our effective tax rate.

Effective Tax Rate for 2013

Our effective tax rate for the first three months of 2013 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following:

• Income earned in non-U.S. tax jurisdictions which is expected to contribute to an approximate 17-percentage point reduction in our effective tax rate for the full year 2013, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items; and

• A valuation allowance increase because we are unable to recognize a tax benefit for losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which is expected to contribute to an approximate six-percentage point increase in our effective tax rate for the full year 2013.

Effective Tax Rate for 2012

Our effective tax rate for the first three months of 2012 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following:

• Income earned in non-U.S. tax jurisdictions which contributed to an approximate 16-percentage point reduction in our effective tax rate, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items; and

• A valuation allowance increase because we were unable to recognize a tax benefit for year-to-date losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which contributed to an approximate three-percentage point increase in our effective tax rate for 2012.

We monitor the jurisdictions for which valuation allowances against deferred tax assets were established in previous years, and we evaluate, on a quarterly basis, the need for the valuation allowances against deferred tax assets in those jurisdictions. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary.

The majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until 2026 and beyond, based on current tax laws.

Net Income Attributable to Noncontrolling Interests

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	3,279	$	2,397	$	882		36.8	%

Net income attributable to noncontrolling interests represents third-party ownership interests in the net income of our Global Power Group’s Martinez, California gas-fired cogeneration subsidiary and our manufacturing subsidiaries in Poland and the People’s Republic of China, as well as our Global E&C Group’s subsidiaries in Malaysia and South Africa. The change in net income attributable to noncontrolling interests is based upon changes in the net income of these subsidiaries and/or changes in the noncontrolling interests’ ownership interest in the subsidiaries.

Net income attributable to noncontrolling interests increased during the first three months of 2013, compared to the same period in 2012, which was primarily the net result of an increase in net income from our subsidiary in Martinez, California, partially offset by a decrease in net income from our subsidiaries in Malaysia and Poland.

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EBITDA

EBITDA, as discussed and defined below, is the primary measure of operating performance used by our chief operating decision maker.

In addition to our two business groups, which also represent operating segments for financial reporting purposes, we report the financial results associated with the management of entities which are not managed by one of our two business groups, which include corporate center expenses, our captive insurance operation and expenses related to certain legacy liabilities, such as asbestos, in our C&F Group, which also represents an operating segment for financial reporting purposes.

Three Months Ended March 31,
2013		2012		$ Change		% Change
$	40,119	$	71,966	$	(31,847)		(44.3)%

EBITDA decreased in the first three months of 2013, compared to the same period in 2012. This decrease was primarily driven by the decrease in contract profit of $19,500, excluding the increase in net foreign exchange transaction losses and the impact of our two business acquisitions. The decrease in EBITDA also includes the aggregate impact of an increase in net foreign exchange transaction losses of $11,100, which were recognized in cost of operating revenues and other deductions, net of $7,300 and $3,800, respectively, and the unfavorable impact of a severance-related postemployment benefits charge of $2,000 recognized during the first three months of 2013. The above decreases were partially offset by the favorable impact of our two business acquisitions. The severance-related postemployment benefits charge of $2,000 recognized during the first three months of 2013 included charges in SG&A and cost of operating revenues of $1,400 and $600, respectively.

Please refer to the preceding discussion of each of these items within this “—Results of Operations” section and the individual segment explanations below for additional details.

EBITDA is a supplemental financial measure not defined in generally accepted accounting principles, or GAAP. We define EBITDA as income attributable to Foster Wheeler AG before interest expense, income taxes, depreciation and amortization. We have presented EBITDA because we believe it is an important supplemental measure of operating performance. Certain covenants under our senior unsecured credit agreement use an adjusted form of EBITDA such that in the covenant calculations the EBITDA as presented herein is adjusted for certain unusual and infrequent items specifically excluded in the terms of our senior unsecured credit agreement. We believe that the line item on the consolidated statement of operations entitled “net income attributable to Foster Wheeler AG” is the most directly comparable GAAP financial measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income attributable to Foster Wheeler AG as an indicator of operating performance or any other GAAP financial measure. EBITDA, as calculated by us, may not be comparable to similarly titled measures employed by other companies. In addition, this measure does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. As EBITDA excludes certain financial information that is included in net income attributable to Foster Wheeler AG, users of this financial information should consider the type of events and transactions that are excluded. Our non-GAAP performance measure, EBITDA, has certain material limitations as follows:

• It does not include interest expense. Because we have borrowed money to finance some of our operations, interest is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations;

• It does not include taxes. Because the payment of taxes is a necessary and ongoing part of our operations, any measure that excludes taxes has material limitations; and

• It does not include depreciation and amortization. Because we must utilize property, plant and equipment and intangible assets in order to generate revenues in our operations, depreciation and amortization are necessary and ongoing costs of our operations. Therefore, any measure that excludes depreciation and amortization has material limitations.

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A reconciliation of EBITDA to net income attributable to Foster Wheeler AG is shown below.

	Three Months Ended March 31,
	2013		2012
EBITDA:
Global E&C Group	$	35,188	$	46,928
Global Power Group		24,728		52,316
C&F Group*		(19,797)		(27,278)
Total		40,119		71,966
Less: Interest expense		2,672		3,416
Less: Depreciation and amortization**		19,261		13,020
Less: Provision for income taxes		5,160		14,884
Net income attributable to Foster Wheeler AG	$	13,026	$	40,646

* Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest.

** Depreciation expense for the three months ended March 31, 2013 included an impairment charge of $3,900 recognized in connection with our Camden, New Jersey waste-to-energy facility within our Global Power Group business segment. Please refer to Note 11 to the consolidated financial statements included in this quarterly report on Form 10-Q for further information.

EBITDA in the above table includes the following:	Three Months Ended March 31,
	2013		2012
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions:(1)
Global E&C Group	$	10,500	$	3,800
Global Power Group(2)		8,500		10,300
Total(2)	$	19,000	$	14,100
Net asbestos-related provision in our C&F Group(3)	$	2,000	$	2,000
Charges for severance-related postemployment benefits:
Global E&C Group	$	1,200	$	-
Global Power Group		400		-
C&F Group		400		-
Total	$	2,000	$	-

(1) Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 to the consolidated financial statements included in this quarterly report on Form 10-Q for further information regarding changes in our final estimated contract profit.

(2) The changes in final estimated contract profit revisions for our Global Power Group were increased during the three months ended March 31, 2012 for a favorable settlement with a subcontractor of approximately $6,900.

(3) Please refer to Note 12 to the consolidated financial statements included in this quarterly report on Form 10-Q for further information regarding the revaluation of our asbestos liability and related asset.

The accounting policies of our business segments are the same as those described in our summary of significant accounting policies as disclosed in our 2012 Form 10-K. The only significant intersegment transactions relate to interest on intercompany balances. We account for interest on those arrangements as if they were third-party transactions (i.e., at current market rates), and we include the elimination of that activity in the results of the C&F Group.

Business Segments

Global E&C Group

	Three Months Ended March 31,
	2013		2012		$ Change			% Change
Operating revenues	$	587,974	$	670,873	$	(82,899	)		(12.4)%
EBITDA	$	35,188	$	46,928	$	(11,740	)		(25.0)%

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Results

Our Global E&C Group’s operating revenues by geographic region for the three months ended March 31, 2013 and 2012, based upon where our projects are being executed, were as follows:

	Three Months Ended March 31,
	2013		2012		$ Change			% Change
Africa	$	18,912	$	21,574	$	(2,662	)		(12.3)%
Asia Pacific		117,226		292,516		(175,290	)		(59.9)%
Europe		129,751		134,393		(4,642	)		(3.5)%
Middle East		62,078		45,104		16,974			37.6%
North America		181,456		105,956		75,500			71.3%
South America		78,551		71,330		7,221			10.1%
Total	$	587,974	$	670,873	$	(82,899	)		(12.4)%

Our Global E&C Group experienced a decrease in operating revenues of 12% in the first three months of 2013, compared to the same period in 2012. The decrease in the period was primarily driven by decreased flow-through revenues of $142,600, partially offset by the favorable impact in 2013 of our two acquisitions acquired after the three months ended March 31, 2012. Excluding the impact of flow-through revenues, our two acquired businesses and foreign currency fluctuations, our Global E&C Group’s operating revenues increased 7% in the first three months of 2013, compared to the same period in 2012. Please refer to the “—Overview of Segment” section below for a discussion of our Global E&C Group’s market outlook.

Our Global E&C Group’s EBITDA decreased in the first three months of 2013, compared to the same period in 2012. This decrease was primarily driven by the aggregate impact of an increase in net foreign exchange transaction losses of $11,800, which were recognized in cost of operating revenues and other deductions, net of $8,600 and $3,300, respectively. Our Global E&C Group also experienced a decrease in contract profit of $4,100, excluding the increase in net foreign exchange transaction losses of $8,600 discussed above and the impact of our two business acquisitions. Additionally, our Global E&C Group’s EBITDA variance included the unfavorable impact of a severance-related postemployment benefits charge during the first three months of 2013 of $1,200, which was primarily recognized in SG&A on the consolidated statement of operations. The above decreases were partially offset by the favorable impact on EBITDA for our two business acquisitions.

The above decrease in contract profit, excluding the increase in net foreign exchange transaction losses of $8,600 discussed above and the impact of our two business acquisitions, primarily resulted from decreased contract profit margin, partially offset by increased volume of operating revenues, excluding flow-through revenues.

Overview of Segment

Our Global E&C Group, which operates worldwide, designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related infrastructure, including power generation facilities, distribution facilities, gasification facilities and processing facilities associated with the metals and mining sector. Our Global E&C Group is also involved in the design of facilities in developing market sectors, including carbon capture and storage, solid fuel-fired integrated gasification combined-cycle power plants, coal-to-liquids, coal-to-chemicals and biofuels. Additionally, our Global E&C Group is involved in the development, engineering, construction, ownership and operation of power generation facilities, from conventional and renewable sources, and of waste-to-energy facilities.

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Our Global E&C Group provides the following services:

• Design, engineering, project management, construction and construction management services, including the procurement of equipment, materials and services from third-party suppliers and contractors;

• Environmental remediation services, together with related technical, engineering, design and regulatory services; and

• Design and supply of direct-fired furnaces, including fired heaters and waste heat recovery generators, used in a range of refinery, chemical, petrochemical, oil and gas processes, including furnaces used in our proprietary delayed coking and hydrogen production technologies.

Our Global E&C Group owns one of the leading technologies (SYDEC^SM delayed coking) used in refinery residue upgrading, in addition to other refinery residue upgrading technologies (solvent deasphalting and visbreaking), and a hydrogen production process used in oil refineries and petrochemical plants. We also own a proprietary sulfur recovery technology which is used to treat gas streams containing hydrogen sulfide for the purpose of reducing the sulfur content of fuel products and to recover a saleable sulfur by-product. Additionally, our Global E&C Group has experience with, and is able to work with, a wide range of processes owned by others.

Our Global E&C Group generates revenues from design, engineering, procurement, construction and project management activities pursuant to contracts spanning up to approximately four years in duration and generates equity earnings from returns on its noncontrolling interest investments in various power production facilities.

In the engineering and construction industry, we expect long-term demand to be strong for the end products produced by our clients, and we believe that this long-term demand will continue to stimulate investment by our clients in new, expanded and upgraded facilities. Our clients plan their investments based on long-term time horizons. We believe that global demand for energy, chemicals and pharmaceuticals will continue to grow over the long-term and that clients will continue to invest in new and upgraded capacity to meet that demand.

Global markets in the engineering and construction industry have experienced intense competition among engineering and construction contractors and pricing pressure for contracts awarded. Clients’ bidding and contract award processes continue to be more protracted, particularly for projects sponsored by national oil companies. Additionally, some clients have been releasing, and we expect will continue to release, tranches of work on a piecemeal basis. The engineering and construction industry may be further impacted by potential downside risk to global economic growth driven primarily by continued sovereign debt and bank funding pressures in the Eurozone, the speed at which governmental efforts directed at spending and debt reduction are being implemented, a slowdown in the economic growth rate in China and geopolitical oil supply risks, which could impact global economic growth through a significant rise in oil prices. If these risks materialize, our Global E&C Group could be impacted. However, we are seeing clients continuing to develop new projects and, after making final investment decisions, moving forward with previously planned projects.

We have continued to be successful in booking contracts of varying types and sizes in our key end markets, including a project management consultancy, or PMC, contract for a gas compression project in North Africa, a front-end engineering design, or FEED, contract for a refinery upgrade in Russia, a PMC contract for a chemicals facility in Asia, a pre-FEED contract for a chemicals facility in Asia, a FEED contract for a refinery upgrade in South America and further contract awards for services from various clients under existing long-term agreements.

We believe our success in this regard is a reflection of our technical expertise, our project execution performance, our long-term relationships with clients, our safety performance, and our selective approach in pursuit of new prospects where we believe we have significant differentiators.

Global Power Group

	Three Months Ended March 31,
	2013		2012		$ Change		% Change
Operating revenues	$	208,314	$	262,223	$	(53,909)		(20.6)%
EBITDA	$	24,728	$	52,316	$	(27,588)		(52.7)%

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Results

Our Global Power Group’s operating revenues by geographic region for the three months ended March 31, 2013 and 2012, based upon where our projects are being executed, were as follows:

	Three Months Ended March 31,
	2013		2012		$ Change		% Change
Africa	$	-	$	1,178	$	(1,178)		(100.00)%
Asia Pacific		75,787		113,156		(37,369)		(33.0)%
Europe		58,438		84,384		(25,946)		(30.7)%
Middle East		2,845		3,180		(335)		(10.5)%
North America		66,282		52,535		13,747		26.2%
South America		4,962		7,790		(2,828)		(36.3)%
Total	$	208,314	$	262,223	$	(53,909)		(20.6)%

Our Global Power Group experienced decreased operating revenues in the first three months of 2013, compared to the same period in 2012. The decrease was primarily attributable to decreased volume of business, partially offset by a favorable impact from foreign currency fluctuations. Excluding foreign currency fluctuations, our Global Power Group’s operating revenues decreased 22% in the first three months of 2013, compared to the same period in 2012. Please refer to the “—Overview of Segment” section below for a discussion of our Global Power Group’s market outlook.

Our Global Power Group’s EBITDA decreased in the first three months of 2013, compared to the same period in 2012, primarily driven by decreased contract profit of $14,000, excluding an impairment charge of $3,900 recognized in the first three months of 2013 as discussed below. The decrease in contract profit primarily resulted from decreased volume of operating revenues and, to a lesser extent, decreased contract profit margins. The contract profit during the first three months of 2013 was comparatively unfavorable to the same period in 2012 as there was a positive settlement with a subcontractor in the first three months of 2012 that amounted to approximately $6,900. The decrease in EBITDA also included the unfavorable impact of decreased equity earnings from our Global Power Group’s project in Chile of $3,100, the unfavorable impact related to the change in net foreign exchange transaction gains and losses of $1,800 and increased legal fees of $1,600.

During the first three months of 2013, we recorded an impairment charge of $3,900 in connection with our Camden, New Jersey waste-to-energy facility. The impairment charge was recorded as depreciation expense, within cost of operating revenues on our consolidated statement of operations, and therefore is not reflected in EBITDA. Please refer to Note 11 to the consolidated financial statements included in this quarterly report on Form 10-Q for further information.

Our equity earnings from our project in Chile were $4,200 and $7,300 in the first three months of 2013 and 2012, respectively. The decrease in equity earnings in the three months ended March 31, 2013, compared to the same period in 2012, was primarily driven by the impact of lower marginal rates in 2013 for electrical power generation and a decrease in the volume of electricity produced by the project in 2013 due to a planned maintenance outage.

Overview of Segment

Our Global Power Group designs, manufactures and erects steam generators and auxiliary equipment for electric power generating stations, district heating and power plants and industrial facilities worldwide. Our competitive differentiation in serving these markets is the ability of our products to cleanly and efficiently burn a wide range of fuels, singularly or in combination. In particular, our circulating fluidized-bed, which we refer to as CFB, steam generators are able to burn coals of varying quality, as well as petroleum coke, lignite, municipal waste, waste wood, biomass, and numerous other materials. Among these fuel sources, coal is the most widely used, and thus the market drivers and constraints associated with coal strongly affect the steam generator market and our Global Power Group’s business. Additionally, our Global Power Group owns and operates a waste-to-energy facility; holds a controlling interest and operates a combined-cycle gas turbine facility; owns a noncontrolling interest in a petcoke-fired CFB facility for refinery steam and power generation; and operates a university cogeneration power facility for steam/electric generation.

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Our Global Power Group offers a number of other products and services related to steam generators, including:

• Design, manufacture and installation of auxiliary and replacement equipment for utility power and industrial facilities, including surface condensers, feedwater heaters, coal pulverizers, steam generator coils and panels, biomass gasifiers, and replacement parts for steam generators;

• Design, supply and installation of nitrogen-oxide, or NO_x, reduction systems and components for pulverized coal steam generators such as selective catalytic reduction systems, low NO_x combustion systems, low NO_x burners, primary combustion and overfire air systems and components, fuel and combustion air measuring and control systems and components;

• Design, supply and installation of flue gas desulfurization equipment for all types of steam generators and industrial equipment;

• A broad range of site services including construction and erection services, maintenance engineering, steam generator upgrading and life extension, and plant repowering;

• Research and development in the areas of combustion, fluid and gas dynamics, heat transfer, materials and solid mechanics; and

• Technology licenses to other steam generator suppliers in select countries.

We believe that a gradual upturn in global economic growth will begin during 2013, which we further believe will improve demand for the products and services of our Global Power Group in 2013, compared to 2012. However, a number of constraining market factors continue to impact the markets that we serve. Political and environmental sensitivity regarding coal-fired steam generators continues to cause prospective projects utilizing coal as their primary fuel to be postponed or cancelled as clients experience difficulty in obtaining the required environmental permits or decide to wait for additional clarity regarding governmental regulations. The sensitivity has been especially pronounced in the U.S. and Western Europe and with the concern that coal-fired steam generators, relative to alternative fuel sources, contribute more toward global warming through the discharge of greenhouse gas emissions into the atmosphere. The outlook for continued lower natural gas pricing over the next three to five years in North America has increased the attractiveness of natural gas, in relation to coal and renewables, for the generation of electricity. In addition, the constraints on the global credit market may continue to impact some of our clients’ investment plans as these clients are affected by the availability and cost of financing, as well as their own financial strategies, which could include cash conservation. These factors could negatively impact investment in the power sector, which in turn could negatively impact our Global Power Group’s business.

There is potential downside risk to global economic growth driven primarily by continued sovereign debt and bank funding pressures in the Eurozone, the speed at which governmental efforts directed at spending and debt reduction are being implemented and geopolitical oil supply risks, which could impact global economic growth through a significant rise in oil prices. If these risks materialize, our Global Power Group could be impacted.

Longer-term, we believe that global demand for electrical energy will continue to grow. We believe that the majority of the growth will be driven by emerging economies and that solid-fuel-fired steam generators will continue to fill a significant portion of the incremental growth in new generating capacity in the emerging economies.

Globally, we see a growing need to repower older coal plants with new, more efficient and cleaner burning plants, including both coal and other fuels, in order to meet environmental, financial and reliability goals set by policy makers in many countries. The fuel flexibility of our CFB steam generators enables them to burn a wide variety of fuels other than coal and to produce carbon-neutral electricity when fired by biomass. In addition, our utility steam generators can be designed to incorporate supercritical steam technology, which significantly improves power plant efficiency and reduces power plant emissions.

We are currently executing a project for four 550 MWe supercritical CFB steam generators for a power project in South Korea, which we believe is an indication of the successful scale-up of our CFB technology and further advances our CFB supercritical technology with a vertical-tube, once-through design. Commercial operation of the units is scheduled for 2015.

We completed an engineering and supply project for a pilot-scale (approximately 30 megawatt thermal, equivalent to approximately 10 megawatt electrical, or MWe) CFB steam generator, which incorporates our carbon-capturing Flexi-Burn^TM technology. Further, we are executing a project together with other parties, which is funded by a grant agreement with the European Commission to support the technology development of a commercial scale (approximately 300 MWe) Carbon Capture and Storage demonstration plant featuring our Flexi-Burn^TM CFB technology.

Recently we were awarded a design and supply contract for a 100 MWe CFB steam generator for a power plant in the Philippines. We were also awarded a contract for the design and supply of a 105 MWe CFB steam generator in South Korea. Additionally, we won contracts to design and supply three utility package steam generators for onshore natural gas liquefaction facilities in Australia and two shop-assembled steam generators in Ireland.

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Liquidity and Capital Resources

Cash Flows Activities

Our cash and cash equivalents and restricted cash balances were:

	As of
	March 31, 2013		December 31, 2012		$ Change		% Change
Cash and cash equivalents	$	475,716	$	582,322	$	(106,606)		(18.3)%
Restricted cash		44,310		63,029		(18,719)		(29.7)%
Total	$	520,026	$	645,351	$	(125,325)		(19.4)%

Total cash and cash equivalents and restricted cash held by our non-U.S. entities as of March 31, 2013 and December 31, 2012 were $443,300 and $522,300, respectively.

During the first three months of 2013, we experienced a decrease in cash and cash equivalents of $106,600, primarily as a result of cash used in operating activities of $36,400, cash used to repurchase shares and to pay related commissions under our share repurchase program of $33,900, cash used for a business acquisition payment, net of cash acquired, of $24,900, the unfavorable impact related to exchange rate changes on our cash and cash equivalents of $11,000, distributions to noncontrolling interests of $10,500 and capital expenditures of $7,900, partially offset by a decrease in restricted cash, excluding foreign currency translation effects, of $17,900.

Cash Flows from Operating Activities

	Three Months Ended March 31,
	2013			2012			$ Change
Net cash used in operating activities	$	(36,445	)	$	(70,028	)	$	33,583

Net cash used in operating activities in the first three months of 2013 primarily resulted from cash used for working capital of $61,700, net asbestos-related payments of $5,700 and mandatory contributions to our non-U.S. pension plans of $5,000, partially offset by cash provided by net income of $44,500, which excludes non-cash charges of $28,200.

The decrease in net cash used in operating activities of $33,600 in the first three months of 2013, compared to the same period of 2012, resulted primarily from a decrease in cash used to fund working capital of $61,100, partially offset by decreased cash provided by net income of $19,600.

Working capital varies from period to period depending on the mix, stage of completion and commercial terms and conditions of our contracts and the timing of the related cash receipts. During the first three months of 2013 and 2012, we used cash to fund working capital, as cash used for services rendered and purchases of materials and equipment exceeded cash receipts from client billings, which included the impact of delayed project payments within our receivables balance.

As more fully described below in “—Outlook,” we believe our existing cash balances and forecasted net cash provided from operating activities will be sufficient to fund our operations throughout the next 12 months. Our ability to maintain or increase our cash flows from operating activities in future periods will depend in large part on the demand for our products and services and our operating performance in the future. Please refer to the sections entitled “—Global E&C Group-Overview of Segment” and “—Global Power Group-Overview of Segment” above for our view of the outlook for each of our business segments.

Cash Flows from Investing Activities

	Three Months Ended March 31,
	2013			2012		$ Change
Net cash (used in)/provided by investing activities	$	(14,625	)	$	5,817	$	(20,442	)

The net cash used in investing activities in the first three months of 2013 was attributable primarily to cash used for a business acquisition, net of cash acquired, of $24,900 and capital expenditures of $7,900, partially offset by cash provided by a decrease in restricted cash, excluding foreign currency translation effects, of $17,900.

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The net cash provided by investing activities in the first three months of 2012 was attributable primarily to a decrease in restricted cash, excluding foreign currency translation effects, of $7,200 and cash provided by a return of investment from unconsolidated affiliates of $6,100, partially offset by capital expenditures of $7,600.

The capital expenditures in the first three months of 2013 and 2012 related primarily to leasehold improvements, information technology equipment and office equipment.

Cash Flows from Financing Activities

	Three Months Ended March 31,
	2013			2012			$ Change
Net cash used in financing activities	$	(44,536	)	$	(22,862	)	$	(21,674	)

The net cash used in financing activities in the first three months of 2013 was attributable primarily to cash used to repurchase shares and to pay related commissions under our share repurchase program of $33,900 and, to a lesser extent, distributions to noncontrolling interests of $10,500.

The net cash used in financing activities in the first three months of 2012 was attributable primarily to distributions to noncontrolling interests of $11,700 and cash used to repurchase shares and to pay related commissions under our share repurchase program of $11,000.

Outlook

Our liquidity forecasts cover, among other analyses, existing cash balances, cash flows from operations, cash repatriations, changes in working capital activities, unused credit line availability and claim recoveries and proceeds from asset sales, if any. These forecasts extend over a rolling twelve-month period. Based on these forecasts, we believe our existing cash balances and forecasted net cash provided by operating activities will be sufficient to fund our operations throughout the next twelve months. Based on these forecasts, our primary cash needs will be working capital, capital expenditures, pension contributions and net asbestos-related payments. We may also use cash for acquisitions, discretionary pension plan contributions or to repurchase our shares under the share repurchase program, as described further below. The majority of our cash balances are invested in short-term interest bearing accounts with maturities of less than three months at creditworthy financial institutions around the world. Further significant deterioration of the current global economic and credit market environment, particularly in the Eurozone countries, could challenge our efforts to maintain our well-diversified asset allocation with creditworthy financial institutions and/or unfavorably impact our liquidity and financial statements. We will continue to monitor the global economic environment, particularly in those countries where we have operations or assets. We continue to consider investing some of our cash in longer-term investment opportunities, including the acquisition of other entities or operations in the engineering and construction industry or power industry and/or the reduction of certain liabilities, such as unfunded pension liabilities.

It is customary in the industries in which we operate to provide standby letters of credit, bank guarantees or performance bonds in favor of clients to secure obligations under contracts. We believe that we will have sufficient letter of credit capacity from existing facilities throughout the next twelve months.

We are dependent on cash repatriations from our subsidiaries to cover payments and expenses of our parent holding company in Switzerland, to cover cash needs related to our asbestos-related liability and other overhead expenses in the U.S. and, at our discretion, specific liquidity needs, such as funding acquisitions and our share repurchase program, as described further below. Consequently, we require cash repatriations to Switzerland and the U.S. from our entities located in other countries in the normal course of our operations to meet our Swiss and U.S. cash needs and have successfully repatriated cash for many years. We believe that we can repatriate the required amount of cash to Switzerland and the U.S. Additionally, we continue to have access to the revolving credit portion of our senior credit facility, if needed.

Our net asbestos-related cash outflows are the result of payments related to asbestos liability indemnity and defense costs in excess of insurance proceeds. During the first three months of 2013, we had net asbestos-related cash outflows of approximately $5,700. We expect net cash outflows for the full year 2013 to be approximately $14,700. This estimate assumes no additional settlements with insurance companies or elections by us to fund additional payments. As we continue to collect cash from insurance settlements and assuming no increase in our asbestos-related insurance liability or any future insurance settlements, the asbestos-related insurance receivable recorded on our balance sheet will continue to decrease.

On August 3, 2012, we entered into a new five-year senior unsecured credit agreement, which replaced our amended and restated senior unsecured credit agreement from July 2010. Our new senior credit agreement provides for a facility of $750,000 and contains an increase option permitting us, subject to certain requirements, to arrange with

44

existing lenders and/or new lenders to provide up to an aggregate of $300,000 in additional commitments. During the term of this senior credit agreement, we may request, subject to certain requirements, up to two one-year extensions of the contractual termination date.

We can issue up to $750,000 under the letter of credit portion of the facility. Letters of credit issued under our new senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in our corporate credit ratings, as defined in the senior credit agreement. Based on our current credit ratings, letter of credit fees for performance and non-performance letters of credit issued under our new senior credit agreement are 0.75% and 1.50% per annum of the outstanding amount, respectively, excluding a nominal fronting fee. We also have the option to use up to $250,000 of the $750,000 for revolving borrowings at a rate equal to adjusted LIBOR, as defined in the senior credit agreement, plus 1.50%, subject also to the performance pricing noted above.

We had approximately $218,600 and $250,600 of letters of credit outstanding under our senior credit agreements in effect as of March 31, 2013 and December 31, 2012, respectively. There were no funded borrowings under our senior credit agreements in effect as of March 31, 2013 and December 31, 2012. Based on our current operating plans and cash forecasts, we do not intend to borrow under our senior credit agreement over the next twelve months. Please refer to Note 5 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our debt obligations.

We are not required to make any mandatory contributions to our U.S. pension plans in 2013 based on the minimum statutory funding requirements. We made mandatory contributions totaling approximately $5,000 to our non-U.S. pension plans during the first three months of 2013. Based on the minimum statutory funding requirements for 2013, we expect to make mandatory contributions totaling approximately $21,300 to our non-U.S. pension plans for the full year. Additionally, we may elect to make discretionary contributions to our U.S. and/or non-U.S. pension plans during 2013.

On September 12, 2008, we announced a share repurchase program pursuant to which our Board of Directors authorized the repurchase of up to $750,000 of our outstanding shares and the designation of the repurchased shares for cancellation. On November 4, 2010, our Board of Directors proposed an increase to our share repurchase program of $335,000, which was approved by our shareholders at an extraordinary general meeting on February 24, 2011. On February 22, 2012, our Board of Directors proposed an additional increase to our share repurchase program of approximately $419,398, which was approved by our shareholders at our 2012 annual general meeting on May 1, 2012.

Based on the aggregate share repurchases under our program through March 31, 2013, we were authorized to spend up to an additional $386,100 to repurchase our outstanding shares. Any repurchases will be made at our discretion in the open market or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements and will depend on a variety of factors, including market conditions, share price and other factors. The program does not obligate us to acquire any particular number of shares. The program has no expiration date and may be suspended or discontinued at any time. Any repurchases made pursuant to the share repurchase program will be funded using our cash on hand. Through March 31, 2013, we have repurchased 45,411,078 shares for an aggregate cost of approximately $1,118,300 since the inception of the repurchase program announced on September 12, 2008. Subsequent to March 31, 2013, we initiated trades to repurchase an aggregate of 2,971,700 additional shares that settled in April 2013 for an aggregate cost of approximately $66,100. Cumulatively through May 2, 2013, we have repurchased 48,382,778 shares for an aggregate cost of approximately $1,184,300 and we are authorized to repurchase approximately $320,100 of additional outstanding shares. We have executed the repurchases in accordance with 10b5-1 repurchase plans as well as other privately negotiated transactions pursuant to our share repurchase program. The 10b5-1 repurchase plans allow us to purchase shares at times when we may not otherwise do so due to regulatory or internal restrictions. Purchases under the 10b5-1 repurchase plans are based on parameters set forth in the plans. For further information, please refer to Part II, Item 2 of this quarterly report on Form 10-Q.

We have not declared or paid a cash dividend since July 2001 and we do not have any plans to declare or pay any cash dividends. Our current senior credit agreement contains limitations on cash dividend payments as well as other restricted payments.

Off-Balance Sheet Arrangements

We own several noncontrolling interests in power projects in Chile and Italy. Certain of the projects have third-party debt that is not consolidated in our balance sheet. We have also issued certain guarantees for our project in Chile. Please refer to Note 3 to the consolidated financial statements in this quarterly report on Form 10-Q for further information related to these projects.

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Backlog and New Orders

New orders are recorded and added to the backlog of unfilled orders based on signed contracts as well as agreed letters of intent, which we have determined are legally binding and likely to proceed. Although backlog represents only business that is considered likely to be performed, cancellations or scope adjustments may and do occur. The elapsed time from the award of a contract to completion of performance may be up to approximately four years. The dollar amount of backlog is not necessarily indicative of our future earnings related to the performance of such work due to factors outside our control, such as changes in project schedules, scope adjustments or project cancellations. We cannot predict with certainty the portion of backlog to be performed in a given year. Backlog is adjusted quarterly to reflect new orders, project cancellations, deferrals, revised project scope and cost and purchases and sales of subsidiaries, if any.

Backlog measured in Foster Wheeler scope reflects the dollar value of backlog excluding third-party costs incurred by us on a reimbursable basis as agent or principal, which we refer to as flow-through costs. Foster Wheeler scope measures the component of backlog with profit potential and corresponds to our services plus fees for reimbursable contracts and total selling price for fixed-price or lump-sum contracts.

New Orders, Measured in Terms of Future Revenues

	Three Months Ended
	March 31, 2013						March 31, 2012
	Global E&C Group		Global Power Group		Total		Global E&C Group		Global Power Group		Total
By Project Location:
North America	$	187,400	$	40,300	$	227,700	$	53,300	$	40,600	$	93,900
South America		43,200		4,200		47,400		71,100		7,500		78,600
Europe		122,800		37,300		160,100		213,400		79,700		293,100
Asia Pacific		55,100		116,900		172,000		276,600		33,800		310,400
Middle East		43,200		200		43,400		45,200		100		45,300
Africa		16,000		-		16,000		13,000		-		13,000
Total	$	467,700	$	198,900	$	666,600	$	672,600	$	161,700	$	834,300
By Industry:
Power generation	$	1,500	$	172,800	$	174,300	$	27,000	$	138,100	$	165,100
Oil refining		265,300		-		265,300		308,800		-		308,800
Pharmaceutical		15,000		-		15,000		14,900		-		14,900
Oil and gas		66,700		-		66,700		206,600		-		206,600
Chemical/petrochemical		87,400		-		87,400		97,900		-		97,900
Power plant operation and maintenance		11,300		26,100		37,400		5,700		23,600		29,300
Environmental		2,400		-		2,400		3,400		-		3,400
Other, net of eliminations		18,100		-		18,100		8,300		-		8,300
Total	$	467,700	$	198,900	$	666,600	$	672,600	$	161,700	$	834,300

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Backlog, Measured in Terms of Future Revenues

	As of March 31, 2013						As of December 31, 2012
	Global		Global				Global		Global
	E&C		Power				E&C		Power
	Group		Group		Total		Group		Group		Total
By Contract Type:
Lump-sum turnkey	$	2,700	$	40,800	$	43,500	$	3,200	$	67,500	$	70,700
Other fixed-price		616,400		668,800		1,285,200		662,500		665,200		1,327,700
Reimbursable		2,100,000		31,300		2,131,300		2,219,000		30,600		2,249,600
Total	$	2,719,100	$	740,900	$	3,460,000	$	2,884,700	$	763,300	$	3,648,000
By Project Location:
North America	$	363,900	$	114,800	$	478,700	$	295,100	$	142,800	$	437,900
South America		502,300		25,400		527,700		555,900		29,800		585,700
Europe		467,000		134,200		601,200		508,500		150,700		659,200
Asia Pacific		526,500		464,600		991,100		616,300		435,400		1,051,700
Middle East		808,200		1,900		810,100		850,700		4,600		855,300
Africa		51,200		-		51,200		58,200		-		58,200
Total	$	2,719,100	$	740,900	$	3,460,000	$	2,884,700	$	763,300	$	3,648,000
By Industry:
Power generation	$	1,200	$	677,100	$	678,300	$	269,000	$	699,500	$	968,500
Oil refining		1,561,400		-		1,561,400		1,676,000		-		1,676,000
Pharmaceutical		79,200		-		79,200		26,600		-		26,600
Oil and gas		230,300		-		230,300		269,600		-		269,600
Chemical/petrochemical		607,200		-		607,200		630,000		-		630,000
Power plant operation and maintenance		215,300		63,800		279,100		100		63,800		63,900
Environmental		4,100		-		4,100		3,200		-		3,200
Other, net of eliminations		20,400		-		20,400		10,200		-		10,200
Total	$	2,719,100	$	740,900	$	3,460,000	$	2,884,700	$	763,300	$	3,648,000
Backlog, measured in terms of Foster Wheeler Scope	$	2,034,100	$	731,200	$	2,765,300	$	2,196,700	$	753,500	$	2,950,200
Global E&C Group Man-hours in Backlog (in thousands)		16,200				16,200		17,000				17,000

The foreign currency translation impact on backlog and Foster Wheeler scope backlog resulted in decreases of $121,200 and $84,100, respectively, as of March 31, 2013 compared to December 31, 2012.

Inflation

The effect of inflation on our financial results is minimal. Although a majority of our revenues are realized under long-term contracts, the selling prices of such contracts, established for deliveries in the future, generally reflect estimated costs to complete the projects in these future periods. In addition, many of our projects are reimbursable at actual cost plus a fee, while some of the fixed-price contracts provide for price adjustments through escalation clauses.

Application of Critical Accounting Estimates

Our consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America. Management and the Audit Committee of our Board of Directors approve the critical accounting policies. A full discussion of our critical accounting policies and estimates is included in our 2012 Form 10-K. We did not have a significant change to the application of our critical accounting policies and estimates during the first three months of 2013.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first three months of 2013, there were no material changes in the market risks as described in our annual report on Form 10-K for the year ended December 31, 2012.

ITEM 4.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, our chief executive officer and our chief financial officer carried out an evaluation, with the participation of our Disclosure Committee and management, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) pursuant to Exchange Act Rule 13a-15. Based on this evaluation, our chief executive officer and our chief financial officer concluded, at the reasonable assurance level, that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting in the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Please refer to Note 12 to the consolidated financial statements in this quarterly report on Form 10-Q for a discussion of legal proceedings, which is incorporated by reference in this Part II.

ITEM 1A.  RISK FACTORS

Our business is subject to a number of risks and uncertainties, including those disclosed in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2012. Except as described below, no material changes to the risk factors disclosed in such annual report on Form 10-K have been identified during the first three months of 2013.

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Recent Swiss legislation will strengthen shareholders’ rights in a manner that may negatively impact our ability to attract and retain members of our board of directors and executive management.

In March 2013, Swiss voters passed an initiative to amend the Swiss constitution. Among other things, the initiative significantly strengthened shareholders’ rights and increases shareholder influence on the compensation for members of the board of directors and executive management of Swiss public companies which are listed on Swiss or other stock exchanges, including stock exchanges in the U.S. In particular, the initiative will require that shareholders of such companies vote annually to approve, with binding effect, the amount of compensation paid to directors and executive management. In addition, the compensation plans of directors and executive management will be subject to further restrictions. Commencement and termination payments will generally be prohibited, and other legislative changes will increase shareholders’ influence on compensation. Further, directors may only be elected for a one year term, such that their appointment will need to be confirmed at every annual general meeting, and our shareholders will also elect the chairman of our board of directors. In addition, our Compensation and Executive Development Committee’s members will be subject to election by shareholders. The initiative also provides for penal sanctions in case of breach of certain of its principles.

As a result of this constitutional amendment, a say on pay bill must be drafted and passed by the Swiss legislature. Before the enactment of the bill into law, the Swiss government will issue a transitional implementation ordinance within one year (before early March 2014), so that the new constitutional principles become effective as soon as possible. This ordinance is then expected to be superseded once the say on pay bill is enacted into law.

The market for experienced and qualified executive talent in our industry is competitive, and our ability to retain such talent is important to our success. The enactment of this Swiss constitutional amendment may negatively impact our ability to compete with non-Swiss companies in order to attract the best people for our board of directors and executive management, which could adversely affect our business, financial condition, results of operations and cash flows.

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers (amounts in thousands of dollars, except share data and per share amounts).

On September 12, 2008, we announced a share repurchase program pursuant to which our Board of Directors authorized the repurchase of up to $750,000 of our outstanding shares and the designation of the repurchased shares for cancellation. On November 4, 2010, our Board of Directors proposed an increase to our share repurchase program of $335,000, which was approved by our shareholders at an extraordinary general meeting on February 24, 2011. On February 22, 2012, our Board of Directors proposed an additional increase to our share repurchase program of approximately $419,398, which was approved by our shareholders at our 2012 annual general meeting on May 1, 2012. Under Swiss law, the repurchase of shares in excess of 10% of the company’s share capital must be approved in advance by the company’s shareholders. As of the May 1, 2012 increase, we were authorized to repurchase up to $500,000 of our outstanding shares.

For further information related to our share repurchase program and the cancellation of shares under Swiss law, please refer to Note 1 to the consolidated financial statements in this quarterly report on Form 10-Q.

The following table provides information with respect to purchases under our share repurchase program during the first quarter of 2013.

Fiscal Month	Total Number of Shares Purchased(1)		Average Price Paid per  Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2013 through January 31, 2013		-	$	-		-
February 1, 2013 through February 28, 2013		-		-		-
March 1, 2013 through March 31, 2013		1,500,000		22.61		1,500,000
Total		1,500,000	$	22.61		1,500,000	$	386,135

⁽¹⁾  During the first quarter of 2013, we repurchased an aggregate of 1,500,000 shares in open market transactions pursuant to our share repurchase program. As of March 31, 2013, we were authorized to spend up to an additional $386,135 to repurchase our outstanding shares. The repurchase program has no expiration date and may be suspended for periods or discontinued at any time. We did not repurchase any shares other than through our publicly announced repurchase program.

⁽²⁾  As of March 31, 2013, an aggregate of 45,411,078 shares were purchased for a total of $1,118,263 since the inception of the repurchase program announced on September 12, 2008.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

ITEM 5.  OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Exhibits
10.1	Foster Wheeler Annual Executive Short-term Incentive Plan, as amended and restated effective February 28, 2013. (Filed as Exhibit 10.11 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.2	Form of Employee Nonqualified Stock Option Agreement effective February 2013 with respect to certain employees and executive officers. (Filed as Exhibit 10.20 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.3	Form of Employee Restricted Stock Unit Award Agreement effective February 2013 with respect to certain employees and executive officers. (Filed as Exhibit 10.23 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.4	Form of Employee Restricted Stock Unit Award Agreement (with Performance Goals) effective February 2013 with respect to certain employees and executive officers. (Filed as Exhibit 10.26 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.5	Form of Director Nonqualified Stock Option Agreement effective February 2013 with respect to non-employee directors. (Filed as Exhibit 10.29 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.6	Form of Director Restricted Stock Unit Agreement effective February 2013 with respect to non-employee directors. (Filed as Exhibit 10.31 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.7	Foster Wheeler AG Senior Executive Severance Plan, effective as of February 28, 2013. (Filed as Exhibit 10.34 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.8	Sixth Amendment to the Employment Agreement between Foster Wheeler Inc. and Umberto della Sala, effective as of January 1, 2013. (Filed as Exhibit 10.47 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.9	Fifth Amendment to the Employment Agreement between Foster Wheeler Inc. and Franco Baseotto, effective January 1, 2013. (Filed as Exhibit 10.54 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.10	Third Amendment to the Employment Agreement between Foster Wheeler Energy Limited and Michelle K. Davies, effective as of March 1, 2013. (Filed as Exhibit 10.58 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.11	Fifth Amendment to the Employment Agreement between Foster Wheeler Inc. and Beth B. Sexton, effective January 1, 2013. (Filed as Exhibit 10.68 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
10.12	Fourth Amendment to the Employment Agreement between Foster Wheeler North America Corp. and Gary Nedelka, effective January 1, 2013. (Filed as Exhibit 10.73 to Foster Wheeler AG’s Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.)
23.1	Consent of Analysis, Research & Planning Corporation.
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of J. Kent Masters.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Franco Baseotto.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of J. Kent Masters.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Franco Baseotto.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FOSTER WHEELER AG

(Registrant)

Date: May 2, 2013	/S/ J. KENT MASTERS
	J. KENT MASTERS
	CHIEF EXECUTIVE OFFICER
Date: May 2, 2013	/S/ FRANCO BASEOTTO
	FRANCO BASEOTTO
	EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER

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