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, 2014

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: 99,713,289 registered shares were outstanding as of April 25, 2014.

FOSTER WHEELER AG

INDEX

Part I FINANCIAL INFORMATION
Item 1	–	Financial Statements (Unaudited):	3
		Consolidated Statement of Operations for the Three Months Ended March 31, 2014 and 2013	3
		Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2014 and 2013	4
		Consolidated Balance Sheet as of March 31, 2014 and December 31, 2013	5
		Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2014 and 2013	6
		Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2014 and 2013	7
		Notes to Consolidated Financial Statements	8
Item 2	–	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3	–	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4	–	Controls and Procedures	57
Part II OTHER INFORMATION
Item 1	–	Legal Proceedings	57
Item 1A	–	Risk Factors	57
Item 2	–	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3	–	Defaults Upon Senior Securities	58
Item 4	–	Mine Safety Disclosures	58
Item 5	–	Other Information	58
Item 6	–	Exhibits	59
Signatures			60

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,
	2014			2013
Operating revenues	$	733,699		$	790,144
Cost of operating revenues		618,164			670,698
Contract profit		115,535			119,446
Selling, general and administrative expenses		82,047			90,332
Other income, net		(6,140	)		(4,751	)
Other deductions, net		10,703			5,312
Interest income		(1,403	)		(1,462	)
Interest expense		3,662			2,672
Net asbestos-related provision		2,008			2,000
Income from continuing operations before income taxes		24,658			25,343
Provision for income taxes		9,718			5,160
Income from continuing operations		14,940			20,183
Discontinued operations:
Loss from discontinued operations before income taxes		—			(3,878	)
Provision for income taxes from discontinued operations		—			—
Loss from discontinued operations		—			(3,878	)
Net income		14,940			16,305
Less: Net (loss)/income attributable to noncontrolling interests		(2,127	)		3,279
Net income attributable to Foster Wheeler AG	$	17,067		$	13,026
Amounts attributable to Foster Wheeler AG:
Income from continuing operations	$	17,067		$	16,904
Loss from discontinued operations		—			(3,878	)
Net income attributable to Foster Wheeler AG	$	17,067		$	13,026
Basic earnings per share attributable to Foster Wheeler AG:
Income from continuing operations (see Note 1)	$	0.17		$	0.16
Loss from discontinued operations		—			(0.04	)
Net income attributable to Foster Wheeler AG	$	0.17		$	0.12
Diluted earnings per share attributable to Foster Wheeler AG:
Income from continuing operations (see Note 1)	$	0.17		$	0.16
Loss from discontinued operations		—			(0.04	)
Net income attributable to Foster Wheeler AG	$	0.17		$	0.12

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,
	2014			2013
Net income	$	14,940		$	16,305
Other comprehensive loss, net of tax:
Foreign currency translation adjustments:
Foreign currency translation adjustments		(3,288	)		(14,413	)
Tax impact		(7	)		—
Foreign currency translation adjustments, net of tax		(3,295	)		(14,413	)
Cash flow hedges adjustments:
Unrealized loss		(2,368	)		(818	)
Tax impact		820			208
Unrealized loss, net of tax		(1,548	)		(610	)
Reclassification for losses included in net income (see Note 8 for further information)		1,020			1,135
Tax impact		(347	)		(288	)
Reclassification for losses included in net income, net of tax		673			847
Total cash flow hedges adjustments, net of tax		(875	)		237
Pension and other postretirement benefits adjustments, net of tax:
Net actuarial loss		(3,980	)		—
Tax impact		498			—
Net actuarial loss, net of tax		(3,482	)		—
Amortization included in net periodic pension cost (see Note 6 for further information):
Net actuarial loss		4,115			4,664
Tax impact		(456	)		(449	)
Net actuarial loss, net of tax		3,659			4,215
Prior service credit		(1,445	)		(1,264	)
Tax impact		114			91
Prior service credit, net of tax		(1,331	)		(1,173	)
Transition obligation		5			14
Tax impact		—			3
Transition obligation, net of tax		5			17
Total pension and other postretirement benefits adjustments, net of tax		(1,149	)		3,059
Other comprehensive loss, net of tax		(5,319	)		(11,117	)
Comprehensive income		9,621			5,188
Less: Comprehensive (loss)/income attributable to noncontrolling interests		(2,693	)		2,492
Comprehensive income attributable to Foster Wheeler AG	$	12,314		$	2,696

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, 2014			December 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	527,867		$	556,190
Accounts and notes receivable, net:
Trade		715,360			671,770
Other		60,581			57,262
Contracts in process		201,034			197,232
Prepaid, deferred and refundable income taxes		61,391			62,856
Other current assets		39,070			38,431
Total current assets		1,605,303			1,583,741
Land, buildings and equipment, net		274,667			279,981
Restricted cash		53,580			82,867
Notes and accounts receivable - long-term		14,645			15,060
Investments in and advances to unconsolidated affiliates		181,736			181,315
Goodwill		169,377			169,801
Other intangible assets, net		108,235			113,463
Asbestos-related insurance recovery receivable		118,711			120,489
Other assets		148,031			143,848
Deferred tax assets		47,710			49,707
TOTAL ASSETS	$	2,721,995		$	2,740,272
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current Liabilities:
Current installments on long-term debt	$	12,696		$	12,513
Accounts payable		248,442			282,403
Accrued expenses		261,640			304,312
Billings in excess of costs and estimated earnings on uncompleted contracts		635,383			569,652
Income taxes payable		36,657			39,078
Total current liabilities		1,194,818			1,207,958
Long-term debt		113,030			113,719
Deferred tax liabilities		40,680			39,714
Pension, postretirement and other employee benefits		109,077			111,221
Asbestos-related liability		248,670			257,180
Other long-term liabilities		206,308			210,651
Commitments and contingencies
TOTAL LIABILITIES		1,912,583			1,940,443
Temporary Equity:
Non-vested share-based compensation awards subject to redemption		10,632			15,664
TOTAL TEMPORARY EQUITY		10,632			15,664
Equity:
Registered shares:
CHF 3.00 par value; authorized: 158,256,236 shares and 157,863,694 shares; conditionally authorized: 57,775,870 shares and 58,168,412 shares; issued: 106,035,442 shares and 105,642,900 shares; outstanding: 99,443,742 shares and 99,051,200 shares.		261,278			259,937
Paid-in capital		226,769			216,450
Retained earnings		950,227			933,160
Accumulated other comprehensive loss		(514,070	)		(509,317	)
Treasury shares (outstanding: 6,591,700 shares and 6,591,700 shares)		(150,131	)		(150,131	)
TOTAL FOSTER WHEELER AG SHAREHOLDERS’ EQUITY		774,073			750,099
Noncontrolling interests		24,707			34,066
TOTAL EQUITY		798,780			784,165
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY	$	2,721,995		$	2,740,272

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, 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
Three Months Ended March 31, 2014
Balance at December 31, 2013	$	259,937	$	216,450		$	933,160	$	(509,317	)	$	(150,131	)	$	750,099		$	34,066		$	784,165
Net income		—		—			17,067		—			—			17,067			(2,127	)		14,940
Other comprehensive loss, net of tax		—		—			—		(4,753	)		—			(4,753	)		(566	)		(5,319	)
Issuance of registered shares upon exercise of stock options		245		1,475			—		—			—			1,720			—			1,720
Issuance of registered shares upon vesting of restricted awards		1,096		(1,096	)		—		—			—			—			—			—
Distributions to noncontrolling interests		—		—			—		—			—			—			(6,666	)		(6,666	)
Share-based compensation expense		—		9,649			—		—			—			9,649			—			9,649
Excess tax benefit related to share-based compensation		—		291			—		—			—			291			—			291
Repurchase of registered shares		—		—			—		—			—			—			—			—
Balance at March 31, 2014	$	261,278	$	226,769		$	950,227	$	(514,070	)	$	(150,131	)	$	774,073		$	24,707		$	798,780

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,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	14,940		$	16,305
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		14,315			15,342
Net non-cash asbestos-related provision		2,008			2,000
Share-based compensation expense		4,617			4,590
Excess tax (benefit)/shortfall related to share-based compensation		(291	)		85
Deferred income tax provision		1,079			4,218
Equity in earnings of unconsolidated affiliates, net of dividends		(4,275	)		(2,023	)
Other noncash items, net		(41	)		30
Changes in assets and liabilities, net of effects from acquisitions:
(Increase)/decrease in receivables		(45,104	)		38,631
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts		60,826			(36,132	)
Decrease in accounts payable and accrued expenses		(71,038	)		(52,280	)
Net change in other current assets and liabilities		1,530			(11,929	)
Net change in other long-term assets and liabilities		(22,241	)		(14,951	)
Net cash used in operating activities — continuing operations		(43,675	)		(36,114	)
Net cash used in operating activities — discontinued operations		—			(331	)
Net cash used in operating activities		(43,675	)		(36,445	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments related to acquisition of businesses, net of cash acquired		—			(24,895	)
Change in restricted cash		29,285			17,598
Capital expenditures		(5,769	)		(7,862	)
Return of investment from unconsolidated affiliates		—			82
Proceeds from sale of short-term investments		—			121
Other investing activities		61			—
Net cash provided by/(used in) investing activities — continuing operations		23,577			(14,956	)
Net cash provided by investing activities — discontinued operations		—			331
Net cash provided by/(used in) investing activities		23,577			(14,625	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares		—			(33,948	)
Distributions to noncontrolling interests		(6,666	)		(10,514	)
Proceeds from stock options exercised		1,720			643
Excess tax benefit/(shortfall) related to share-based compensation		291			(85	)
Repayment of debt and capital lease obligations		(646	)		(632	)
Net cash used in financing activities		(5,301	)		(44,536	)
Effect of exchange rate changes on cash and cash equivalents		(2,924	)		(11,000	)
Decrease in cash and cash equivalents		(28,323	)		(106,606	)
Less: Increase/(decrease) in cash and cash equivalents — discontinued operations		—			—
Decrease in cash and cash equivalents — continuing operations		(28,323	)		(106,606	)
Cash and cash equivalents at beginning of year		556,190			582,322
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	527,867		$	475,716

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, 2013 (“2013 Form 10-K”), filed with the Securities and Exchange Commission on February 27, 2014. The consolidated balance sheet as of December 31, 2013 was derived from the audited financial statements included in our 2013 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. Reclassifications also include the presentation of our former waste-to-energy business as a result of its classification as held-for-sale and, in turn, discontinued operations. Please refer to Note 14 for further information.

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.

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.

8

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,
	2014		2013
Number of separate projects		6		11
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions	$	13,200	$	19,000

Please see Note 12 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, which can include amounts from unapproved change orders when the two requirements described above are met. Unapproved change orders or similar items subject to uncertainty that do not meet the two requirements described above are expensed without the recognition of additional contract revenue. Costs attributable to claims are treated as costs of contract performance as incurred and are recorded in contracts in process. Our consolidated financial statements included commercial claims of $6,600 and $4,500 as of March 31, 2014 and December 31, 2013, respectively, of which substantially all costs had been incurred as of March 31, 2014 and December 31, 2013.

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. In the event that we defer pre-contract costs and we are not successful in obtaining the contract, we write off the deferred costs through our consolidated statement of operations in the period when we no longer assess recoverability of such costs as probable. Deferred pre-contract costs were inconsequential as of March 31, 2014 and December 31, 2013.

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.

9

Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. We assess the need for an allowance for doubtful accounts on a project-by-project basis, which includes the consideration of security instruments that provide us protection in the event of non-payment. When there is a risk of non-payment related to customer credit risk, we record an allowance for doubtful accounts. Because of the nature of our customer base and our rigorous customer credit risk assessment process prior to entering into contracts, the level of our allowance for doubtful accounts is typically a very small percentage of our gross accounts receivable balance. To the extent that there is a risk of non-payment related to commercial or performance issues, we record an allowance against the valuation of contract work in progress within the contract.

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, 2014 or December 31, 2013.

Trade accounts receivable are continually evaluated for collectability. Provisions are established on a project-specific basis when there is an issue associated with the client’s ability to make payments or there are circumstances where the client is not making payment due to contractual issues.

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, 2014 and December 31, 2013, 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.

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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 2 or 3 unobservable market data inputs.

	March 31, 2014						December 31, 2013
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Fair value measurements:
Assets:
Assets measured at fair value on a recurring basis:
Foreign currency forward contracts	$	—	$	1,330	$	—	$	—	$	7,361	$	—
Assets measured at fair value on a non-recurring basis:
Investment in an unconsolidated affiliate	$	—	$	—	$	—	$	—	$	—	$	35,096
Liabilities:
Liabilities measured at fair value on a recurring basis:
Foreign currency forward contracts	$	—	$	1,512	$	—	$	—	$	2,405	$	—
Interest rate swap contracts		—		8,757		—		—		7,866		—
Total liabilities measured at fair value on a recurring basis	$	—	$	10,269	$	—	$	—	$	10,271	$	—

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.

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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.

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

	Three Months Ended March 31,
	2014		2013
Income from continuing operations attributable to Foster Wheeler AG	$	17,067	$	16,904
Basic weighted-average number of shares outstanding		99,147,429		104,386,669
Effect of dilutive securities		1,263,233		253,330
Diluted weighted-average number of shares outstanding		100,410,662		104,639,999
Income from continuing operations per share:
Basic	$	0.17	$	0.16
Diluted	$	0.17	$	0.16

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,
	2014		2013
Stock options		527,547		1,574,710
Performance-based restricted share units		432,445		1,132,649

Pending Exchange Offer and Our Acquisition by AMEC plc – On February 13, 2014, we entered into an Implementation Agreement (the “Implementation Agreement”) with AMEC plc (“AMEC”) relating to the acquisition of all of the issued and to be issued registered shares, par value CHF 3.00 per share, of Foster Wheeler AG (the “FW shares”) by AMEC. On the terms and subject to the conditions of the Implementation Agreement, AMEC will commence an exchange offer (the “Offer”) to acquire all of the FW shares, pursuant to which each validly tendered FW share will be exchanged for a combination (subject to election by each Foster Wheeler shareholder as described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014) of (a) $16.00 in cash plus (b) 0.8998 ordinary shares, par value £0.50 per share, of AMEC (“AMEC shares”) or, at the election of such holder, American Depositary Shares representing such number of AMEC shares.

The closing of the Offer is subject to, among other things, approval by our shareholders of certain amendments to our articles of association to remove certain transfer restrictions and certain voting limitations with respect to the FW shares.

For a full description of the Offer, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014.

Proposed Dividend – On February 26, 2014, our Board of Directors approved a proposal to our shareholders for a one-time dividend of $0.40 per share. We intend to ask our shareholders to approve this dividend at our Annual General Meeting on May 7, 2014 and, subject to shareholder approval, this dividend will be paid shortly after our Annual General Meeting. This dividend is not linked to, and not conditional on, the closing of the Offer. The covenants of our senior unsecured credit agreement do not limit our ability to pay this proposed dividend and we expect that there will be no Swiss withholding taxes on the dividend.

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2. Business Combinations

2014 Acquisition Activity

In April 2014, we acquired certain assets of the Siemens Environmental Systems and Services (“SESS”) business from Siemens Energy, Inc. in a cash transaction for a nominal amount. The SESS business supplies and services clean air technologies for use in power plants and industrial facilities with locations in Pittsburgh, Pennsylvania and Branchburg, New Jersey. The assets, liabilities and results of operations from this acquisition will be included within our Global Power Group business segment.

In March 2014, we entered into a merger implementation agreement with MDM Engineering Group Limited (“MDM Engineering”) to acquire all of the ordinary shares and options of MDM Engineering in a cash transaction valued at approximately $109,000 (the “MDM Transaction”). The MDM Transaction is subject to MDM Engineering shareholder approval and other closing conditions. The MDM Transaction closing is expected to occur in the latter half of 2014. MDM Engineering Group is based in South Africa and is a minerals process and project management company focused on the mining industry. The company provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. The assets, liabilities and results of operations of this business will be included within our Global Engineering and Construction Group (“Global E&C Group”) business segment.

2013 Acquisition Activity

In June 2013, we acquired all of the outstanding shares of a privately held upstream consultancy business located in the United Kingdom and additional related assets in the Middle East. This acquired business specializes in field development and project decision support, focused on the evaluation and implementation of oil and gas field developments covering greenfield and brownfield assets. We paid cash consideration net of cash acquired of £6,000 (approximately $9,300 based on the exchange rates in effect on the payment dates). The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of £3,000 (approximately $5,000 based on the exchange rate in effect on March 31, 2014), depending on the acquired business’ performance, as defined in the sale and purchase agreement, over a period of approximately 3 and a half years subsequent to the acquisition date. Any amounts recognized under 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. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $4,465 and other intangible assets of $5,307 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment.

Also in June 2013, we acquired all of the outstanding shares of a privately held engineering and project management business located in Mexico with experience in both offshore and onshore upstream oil and gas, downstream oil and gas and power projects. We paid cash consideration net of cash acquired of approximately $15,700. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $18,143 and other intangible assets of $7,100 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment.

During our U.S. operations’ fiscal first quarter of 2013, we acquired all of the outstanding shares of a privately held U.S.-based business 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 business partnership. We paid cash consideration net of cash acquired of approximately $25,100, which includes a working capital adjustment paid subsequent to the three months ended March 31, 2013. 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 business’ performance, as defined in the sale and purchase agreement, over a period of approximately 5 years subsequent to the acquisition date. Any amounts recognized under 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. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $10,571 and other intangible assets of $13,980 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment.

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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 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, 2014				December 31, 2013
	Italy		Chile		Italy		Chile
Balance Sheet Data:
Current assets	$	171,591	$	74,166	$	156,844	$	66,867
Other assets (primarily buildings and equipment)		250,729		86,532		259,392		88,936
Current liabilities		112,781		26,086		108,769		25,643
Other liabilities (primarily long-term debt)		149,785		14,482		149,578		14,482
Net assets	$	159,754	$	120,130	$	157,889	$	115,678

	Three Months Ended March 31,
	2014				2013
	Italy		Chile		Italy			Chile
Income Statement Data:
Total revenues	$	33,279	$	20,105	$	33,009		$	17,593
Gross profit		15,450		8,718		196			9,215
Income/(loss) before income taxes		7,641		5,566		(1,653	)		8,885
Net earnings/(loss)		2,365		4,452		(1,271	)		6,868

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.

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

	Three Months Ended March 31,
	2014		2013
Equity in the net earnings of unconsolidated affiliates	$	3,921	$	4,104
Distributions from equity affiliates	$	—	$	1,943

	March 31, 2014		December 31, 2013
Investments in unconsolidated affiliates	$	154,258	$	150,558

Our equity earnings from our projects in Italy were $1,161 in the first three months of 2014 and were inconsequential in the first three months of 2013.

Our equity earnings from our project in Chile were $2,760 and $4,227 in the first three months of 2014 and 2013, respectively. The decrease in equity earnings in the first three months of 2014, compared to the same period in 2013, was primarily driven by a reversal of a risk contingency in the first quarter of 2013 associated with the insurance proceeds received by our project in Chile in connection with its 2010 earthquake loss. Excluding this item, equity earnings would have shown an increase when comparing the first three months of 2014 to the same period in 2013.

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, 2014 or December 31, 2013.

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,
	2014		2013
Fees for operations and maintenance services (included in operating revenues)	$	2,728	$	2,804

	March 31, 2014		December 31, 2013
Receivable from our unconsolidated affiliate in Chile (included in trade receivables)	$	13,904	$	7,866

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, 2014 and December 31, 2013. 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.

	March 31, 2014		December 31, 2013
Balance Sheet Data (excluding intercompany balances):
Current assets	$	5,395	$	5,897
Other assets (primarily buildings and equipment)		35,084		36,118
Current liabilities		2,637		3,024
Other liabilities		4,657		4,819
Net assets	$	33,185	$	34,172

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4. Goodwill and Other Intangible Assets

We have tracked accumulated goodwill impairments since the beginning of fiscal year 2002, our date of adoption of the accounting guidelines related to the assessment of goodwill for impairment. There were no accumulated goodwill impairment losses since 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, 2014		December 31, 2013		March 31, 2014		December 31, 2013
Geographic Regions:
North America	$	83,845	$	84,447	$	4,266	$	4,266
Asia		786		761		—		—
Europe		6,835		6,787		73,060		72,959
Middle East		585		581		—		—
Total	$	92,051	$	92,576	$	77,326	$	77,225

The changes in each of the regions during the three months ended March 31, 2014 were the result of the impact of foreign currency translation adjustments.

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

	March 31, 2014							December 31, 2013
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Patents	$	41,539	$	(34,973	)	$	6,566	$	41,526	$	(34,477	)	$	7,049
Trademarks		66,322		(34,682	)		31,640		66,320		(34,113	)		32,207
Customer relationships, pipeline and backlog		93,824		(28,475	)		65,349		95,199		(25,911	)		69,288
Technology		6,897		(2,217	)		4,680		6,887		(1,968	)		4,919
Total	$	208,582	$	(100,347	)	$	108,235	$	209,932	$	(96,469	)	$	113,463

As of March 31, 2014, the net carrying amounts of our identifiable intangible assets were $44,103 for our Global Power Group and $64,132 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, 2014 and 2013.

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

	Three Months Ended March 31,
	2014		2013
Amortization expense	$	4,108	$	4,054
Approximate full year amortization expense for years:
2014			$	16,300
2015				11,900
2016				9,600
2017				9,200
2018				9,000

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5. Borrowings

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

	March 31, 2014						December 31, 2013
	Current		Long-term		Total		Current		Long-term		Total
Capital Lease Obligations	$	3,212	$	50,593	$	53,805	$	3,040	$	51,359	$	54,399
Special-Purpose Limited Recourse Project Debt:
FW Power S.r.l.		7,444		55,799		63,243		7,433		55,722		63,155
Energia Holdings, LLC at 11.443% interest, due April 15, 2015		2,040		5,355		7,395		2,040		5,355		7,395
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	$	12,696	$	113,030	$	125,726	$	12,513	$	113,719	$	126,232
Estimated fair value					$	140,130					$	139,912

Senior Credit Agreement — 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 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 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 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 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 senior credit agreement contains various customary restrictive covenants. In addition, our senior credit agreement contains financial covenants relating to leverage and interest coverage ratios. Our total leverage ratio compares total indebtedness to EBITDA, as defined in the credit agreement, and our total interest coverage ratio compares EBITDA, as defined in the credit agreement, 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 senior credit agreement. We have been in compliance with all financial covenants and other provisions of our senior credit agreement during the three months ended March 31, 2014 and 2013.

We had approximately $304,500 and $253,900 of letters of credit outstanding under our senior credit agreement as of March 31, 2014 and December 31, 2013, respectively. The letter of credit fees under our senior credit agreement as of March 31, 2014 and December 31, 2013 ranged from 0.75% to 1.50% of the outstanding amount, excluding fronting fees. There were no funded borrowings outstanding under our senior credit agreement as of March 31, 2014 and December 31, 2013.

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

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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 2014, we are not required to make any mandatory contributions to our U.S. pension plans. The following table provides details on 2014 mandatory contribution activity for our non-U.S. pension plans:

Contributions in the three months ended March 31, 2014	$	5,400
Remaining contributions expected for the year 2014		17,900
Contributions expected for the year 2014	$	23,300

We did not make any discretionary contributions during the first three months of 2014; however, we may elect to make discretionary contributions to our U.S. and/or non-U.S. pension plans during the remainder of 2014.

Other Postretirement Benefit Plans — Certain employees in the U.S. and Canada may become eligible for other postretirement benefit plans such as health care and life insurance 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 which provides coverage for an employee’s beneficiary upon the death of the employee. This plan has been closed to new entrants since 1988.

Components of net periodic benefit cost/(credit) include:

	Defined Benefit Pension Plans						OPEB Plans
	Three Months Ended March 31,						Three Months Ended March 31,
	2014			2013			2014			2013
Net periodic benefit (credit)/cost:
Service cost	$	298		$	300		$	12		$	18
Interest cost		14,020			12,829			588			859
Expected return on plan assets		(18,127	)		(16,291	)		—			—
Amortization of loss/(gain)		4,144			4,474			(29	)		190
Amortization of prior service credit		(571	)		(390	)		(874	)		(874	)
Amortization of transition obligation		5			14			—			—
Net periodic benefit (credit)/cost	$	(231	)	$	936		$	(303	)	$	193

The components of net periodic benefit (credit)/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. Also refer to Note 10 for the related tax effect on pension and other postretirement benefit adjustments that are recognized in other comprehensive loss.

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 breach of covenants, breach of representations and warranties, as well as potential exposure for retained liabilities, environmental matters and third party claims 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; however many of our indemnification obligations, including for environmental matters, are capped. Historically, our payments under these indemnification obligations have not had a significant effect on our business, financial condition, results of operations or cash flows. We believe that if we were to incur a loss related to any of these matters, such loss would not have a significant effect on our business, financial condition, results of operations or cash flows.

We maintain liabilities for environmental matters for properties owned and for properties covered under the indemnification obligations described above for businesses and/or assets that we previously owned and sold to third parties. As of March 31, 2014 and December 31, 2013, the carrying amounts of our environmental liabilities were $6,700 and $6,800, respectively.

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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,
Warranty Liability:	2014			2013
Balance at beginning of year	$	73,500		$	90,100
Accruals		5,500			6,100
Settlements		(1,600	)		(2,000	)
Adjustments to provisions *		(5,500	)		(3,700	)
Foreign currency translation		900			(2,200	)
Balance at end of period	$	72,800		$	88,300

* Adjustments to the provisions represent reversals of warranty provisions that are no longer required.

We are contingently liable under standby letters of credit, bank guarantees and surety bonds, totaling $1,036,500 and $960,500 as of March 31, 2014 and December 31, 2013, 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, 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, 2014		December 31, 2013		Balance Sheet Location	March 31, 2014		December 31, 2013
Derivatives designated as hedging instruments:
Interest rate swap contracts	Other assets	$	—	$	—	Other long-term liabilities	$	8,757	$	7,866
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		1,266		7,157	Contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts		1,406		2,018
Foreign currency forward contracts	Other accounts receivable		64		204	Accounts payable		106		387
Total derivatives		$	1,330	$	7,361		$	10,269	$	10,271

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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, 2014. 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, 2014, we had a total gross notional amount, measured in U.S. dollar equivalent, of approximately $277,200 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 2014 through 2016.

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.

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

		Amount of Gain/(Loss)
	Location of Gain/(Loss)	Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments	Recognized	Three Months Ended March 31,
	in Income on Derivatives	2014			2013
Foreign currency forward contracts	Cost of operating revenues	$	(828	)	$	(7,320	)
Foreign currency forward contracts	Other deductions, net		116			(1,276	)
Total		$	(712	)	$	(8,596	)

The mark-to-market adjustments on foreign currency forward exchange 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, 2014 and 2013, we included net cash inflows/(outflows) on the settlement of derivatives of $3,711 and $(889), 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 $56,900 as of March 31, 2014.

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.

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

	Three Months Ended March 31,
	2014			2013
Unrealized loss recognized in other comprehensive income	$	(1,456	)	$	(448	)
Loss reclassified from accumulated other comprehensive loss to interest expense		585			625

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. See Note 10 for the related tax effect on cash flow hedges that are recognized in other comprehensive income.

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,
	2014		2013
Share-based compensation	$	4,617	$	4,590
Related income tax benefit		300		185

As of March 31, 2014, 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 $21,667, $14,612 and $1,977, respectively. Those amounts are expected to be recognized as expense over a weighted-average period of approximately two years.

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 did not grant any stock options during the three months ended March 31, 2014 or 2013.

Our share-based compensation plan includes 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.

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Reconciliations of temporary equity for the three months ended March 31, 2014 and 2013 were as follows:

	Three Months Ended March 31,
	2014			2013
Balance at beginning of year	$	15,664		$	8,594
Compensation cost during the period for those equity awards with intrinsic value on the grant date		3,833			3,392
Intrinsic value of equity awards vested during the period for those equity awards with intrinsic value on the grant date		(8,865	)		(3,794	)
Balance at end of period	$	10,632		$	8,192

Our articles of association provide for conditional capital for the issuance of shares under our share-based compensation plan 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, 2014, our remaining available conditional capital was 57,775,870 shares.

10. Accumulated Other Comprehensive Loss

Below are the adjustments included in other comprehensive loss related to foreign currency translation, cash flow hedges and pension and other postretirement benefits and their related tax provision/(benefit) and balances attributable to noncontrolling interests and Foster Wheeler AG:

	Three Months Ended March 31,
	2014			2013
Foreign currency translation	$	(3,288	)	$	(14,413	)
Tax impact		(7	)		—
Foreign currency translation, net of tax		(3,295	)		(14,413	)
Less: Attributable to noncontrolling interests		(570	)		(789	)
Attributable to Foster Wheeler AG	$	(2,725	)	$	(13,624	)
Cash flow hedges*	$	(1,348	)	$	317
Tax impact		473			(80	)
Attributable to Foster Wheeler AG	$	(875	)	$	237
Pension and other postretirement benefits	$	(1,305	)	$	3,414
Tax impact		156			(355	)
Pension and other postretirement benefits, net of tax		(1,149	)		3,059
Less: Attributable to noncontrolling interests		4			2
Attributable to Foster Wheeler AG	$	(1,153	)	$	3,057
Other comprehensive loss attributable to Foster Wheeler AG	$	(4,753	)	$	(10,330	)

* Cash flow hedges include the impact of our proportionate share from unconsolidated affiliates accounted for under the equity method of accounting.

No tax is provided on foreign currency translation adjustments in comprehensive income to the extent the related earnings are indefinitely reinvested in each subsidiary’s country of domicile.

Reclassifications from accumulated other comprehensive loss related to cash flow hedges 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. Please refer to Note 8 for further information.

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 6 for further information.

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Below is a rollforward of accumulated other comprehensive loss adjusted for other comprehensive income/(loss) items attributable to Foster Wheeler AG (all amounts net of tax):

	Accumulated Other Comprehensive Loss
	Accumulated Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Benefits			Total  Accumulated Other Comprehensive Loss
Balance at December 31, 2012	$	(86,729	)	$	(12,412	)	$	(468,462	)	$	(567,603	)
Other comprehensive (loss)/income		(13,624	)		237			3,057			(10,330	)
Balance at March 31, 2013	$	(100,353	)	$	(12,175	)	$	(465,405	)	$	(577,933	)
Balance at December 31, 2013	$	(92,017	)	$	(8,845	)	$	(408,455	)	$	(509,317	)
Other comprehensive loss		(2,725	)		(875	)		(1,153	)		(4,753	)
Balance at March 31, 2014	$	(94,742	)	$	(9,720	)	$	(409,608	)	$	(514,070	)

11. 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 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 2014

Our effective tax rate for the first three months of 2014 was greater than the U.S. statutory rate of 35% primarily because of the disproportionately higher share of losses from jurisdictions where we are unable to recognize a tax benefit because of a valuation allowance. However, we expect the effective tax rate for the first quarter to be an exception and not indicative of the remaining quarters in 2014.

The increase in our effective tax rate for the first three months of 2014 was higher than the U.S. statutory rate of 35% primarily due to the net impact of the following:

• During the first three months of 2014, income earned in non-U.S. jurisdictions contributed to an approximate 11-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. We anticipate a similar impact on our 2014 full-year effective tax rate; and

• During the first three months of 2014, 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 16-percentage point increase in our effective tax rate. We do not anticipate this adjustment to be representative of the impact on our 2014 full-year effective tax rate. We expect the impact of losses subject to a valuation allowance to have a minimal impact on our 2014 full-year effective tax rate.

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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 contributed to an approximate 17-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 six-percentage point increase in our effective tax rate.

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 2025 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 2009.

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 during the remainder of 2014. 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.

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12. Business Segments

We operate through two business 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 export 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 minerals and metals 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 owns and operates electric power generating wind farms in Italy and also owns a noncontrolling interest in two electric power generation projects, one waste-to-energy project and one wind farm project, all of which are located in Italy, and a noncontrolling interest in a joint venture company that is fully licensed to engineer, procure and construct processing facilities in China. 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 installs steam generating and auxiliary equipment for electric power generating stations, district heating and industrial facilities worldwide. Additionally, our Global Power Group 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 from Continuing Operations

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

	Three Months Ended March 31,
	2014		2013
Operating Revenues (Third-Party) by Industry:
Power generation	$	182,855	$	182,464
Oil refining		203,034		323,738
Pharmaceutical		20,499		37,846
Oil and gas		103,774		85,258
Chemical/petrochemical		152,344		102,179
Power plant design, operation and maintenance		54,639		44,627
Environmental		1,670		1,224
Other, net of eliminations		14,884		12,808
Total	$	733,699	$	790,144
Operating Revenues (Third-Party) by Business Segment:
Global E&C Group	$	553,261	$	587,974
Global Power Group		180,438		202,170
Total	$	733,699	$	790,144
Operating Revenues (Third-Party) by Geographic Region:
Africa	$	13,169	$	18,912
Asia Pacific		221,827		193,013
Europe		144,446		188,189
Middle East		114,397		64,923
North America		185,960		241,594
South America		53,900		83,513
Total	$	733,699	$	790,144

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 and depreciation and amortization.

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

	Three Months Ended March 31,
	2014			2013
EBITDA:
Global E&C Group	$	40,054		$	35,188
Global Power Group		28,726			24,687
C&F Group *		(24,018	)		(19,797	)
Discontinued operations		—			41
Total EBITDA		44,762			40,119
Less: Discontinued operations		—			41
EBITDA from continuing operations		44,762			40,078
Add: Net (loss)/income attributable to noncontrolling interests		(2,127	)		3,279
Less: Interest expense		3,662			2,672
Less: Depreciation and amortization		14,315			15,342
Income from continuing operations before income taxes		24,658			25,343
Less: Provision for income taxes		9,718			5,160
Income from continuing operations		14,940			20,183
Loss from discontinued operations**		—			(3,878	)
Net income		14,940			16,305
Less: Net (loss)/income attributable to noncontrolling interests		(2,127	)		3,279
Net income attributable to Foster Wheeler AG	$	17,067		$	13,026

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

** Loss from discontinued operations 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. Please refer to Note 14 for further information.

EBITDA in the above table includes the following:

	Three Months Ended March 31,
	2014		2013
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions:(1)
Global E&C Group	$	3,300	$	10,500
Global Power Group		9,900		8,500
Total	$	13,200	$	19,000
Net asbestos-related provision in our C&F Group(2)	$	2,000	$	2,000
Charges for severance-related postemployment benefits:
Global E&C Group	$	900	$	1,200
Global Power Group		100		400
C&F Group		—		400
Total	$	1,000	$	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) Please refer to Note 13 for further information regarding the revaluation of our asbestos liability and related asset.

During 2013, we initiated restructuring actions relating to ongoing cost reduction efforts within our Global Power Group, including severance-related postemployment benefits and consolidation of manufacturing operations. We recorded net pre-tax restructuring costs totaling $19,100 for restructuring actions initiated in 2013.

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We are expecting to complete the severance-related postemployment benefits activities in 2014 and the majority of facility-related cost reduction actions in 2015. No specific plans for significant other actions have been finalized at this time. The following table summarizes the liability balances and utilization by cost type related to the 2013 restructuring actions:

Net pre-tax restructuring costs	Severance			Facility exit,  lease termination & other costs			Total
Balance as of December 31, 2013	$	11,400		$	2,100		$	13,500
2014 charge		—			—			—
Utilization and foreign exchange		(1,827	)		(47	)		(1,874	)
Balance as of March 31, 2014	$	9,573		$	2,053		$	11,626

The accounting policies of our business segments are the same as those described in our summary of significant accounting policies as disclosed in our 2013 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.

Loss from discontinued operations included the following:

	Three Months Ended March 31,
	2014		2013
EBITDA from discontinued operations	$	—	$	41
Less: Interest expense		—		—
Less: Depreciation and amortization*		—		3,919
Loss from discontinued operations before income taxes*		—		(3,878	)
Less: Provision for income taxes		—		—
Loss from discontinued operations*	$	—	$	(3,878	)

* During 2013, we recorded an impairment charge of $3,919 in connection with our Camden, New Jersey waste-to-energy facility which was recorded as depreciation expense within income/(loss) from discontinued operations. Please refer to Note 14 for further information.

13. 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,
Number of Claims by period:	2014			2013
Open claims at beginning of period		125,240			125,310
New claims		990			1,210
Claims resolved		(1,950	)		(1,040	)
Open claims at end of period		124,280			125,480

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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 2029. 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.

U.S. Asbestos	March 31, 2014		December 31, 2013
Asbestos-related assets recorded within:
Accounts and notes receivable-other	$	20,621	$	20,256
Asbestos-related insurance recovery receivable		90,831		91,225
Total asbestos-related assets	$	111,452	$	111,481
Asbestos-related liabilities recorded within:
Accrued expenses	$	46,900	$	52,600
Asbestos-related liability		218,459		225,600
Total asbestos-related liabilities	$	265,359	$	278,200
Liability balance by claim category:
Open claims	$	42,793	$	46,800
Future unasserted claims		222,566		231,400
Total asbestos-related liabilities	$	265,359	$	278,200

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 2014 as a result of indemnity and defense cost payments totaling approximately $14,800, partially offset by the impact of an increase in the liability related to our rolling 15-year asbestos-related liability estimate of approximately $2,000. 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 2029.

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 2029, 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 2029, 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 2029.

Through March 31, 2014, total cumulative indemnity costs paid, prior to insurance recoveries, were approximately $835,900 and total cumulative defense costs paid were approximately $414,600, or approximately 33% of total defense and indemnity costs. The overall historic average combined indemnity and defense cost per resolved claim through March 31, 2014 has been approximately $3.3. 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 2029. 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. 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, 2014 and December 31, 2013, 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, 2014 or 2013. 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, 2014 and 2013 was approximately $2,000 in both periods 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 U.S. asbestos-related net cash impact for indemnity and defense cost payments and collection of insurance proceeds:

	Three Months Ended March 31,
	2014		2013
Asbestos litigation, defense and case resolution payments	$	14,800	$	14,600
Insurance proceeds		—		(8,900	)
Net asbestos-related payments	$	14,800	$	5,700

We expect to have net cash outflows of $32,100 during the full year 2014 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, 2013 liability estimate, an increase of 25% in the average per claim indemnity settlement amount would increase the liability by $40,300 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, 1,059 claims have been brought against our U.K. subsidiaries, of which 278 remained open as of March 31, 2014. 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 2029:

U.K. Asbestos	March 31, 2014		December 31, 2013
Asbestos-related assets:
Accounts and notes receivable-other	$	1,493	$	1,483
Asbestos-related insurance recovery receivable		27,880		29,264
Total asbestos-related assets	$	29,373	$	30,747
Asbestos-related liabilities:
Accrued expenses	$	1,493	$	1,483
Asbestos-related liability		30,211		31,580
Total asbestos-related liabilities	$	31,704	$	33,063
Liability balance by claim category:
Open claims	$	6,955	$	8,487
Future unasserted claims		24,749		24,576
Total asbestos-related liabilities	$	31,704	$	33,063

The liability estimates are based on a U.K. House of Lords judgment that pleural plaque claims do not amount to a compensable injury. If this ruling is reversed by legislation, the total asbestos liability recorded in the U.K. would increase to approximately $51,200, with a corresponding increase in the asbestos-related asset.

Project Claims

In addition to the specific matters 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 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 us for delay-related damages and asserts cross claims against us seeking over $5,000 in non-delay related damages.

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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.

On August 30, 2013, our client filed a petition with the U.S. Bankruptcy Court for the District of Delaware seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The filing automatically stayed all proceedings against our client, including the four-party arbitration discussed above. Our client’s filing included a motion seeking authorization for the use of cash collateral to fund its activities during the bankruptcy proceedings. In its motion, our client indicated its intent to draw on performance and retention letters of credit we previously issued in connection with the contract totaling approximately $59,000, contending that the funds were needed to fund operations during the bankruptcy and make repairs to the power plant. We opposed the motion on various grounds, including that any such draw would be unsupported and wrongful, and applied for an order temporarily restraining our client from drawing on the letters of credit, lifting the automatic stay of the arbitration proceeding and transferring the question of our client’s right to draw on our letters of credit back to the arbitration for resolution in the context of the overall dispute. The bankruptcy court granted our application for temporary restraint and scheduled a further hearing on the issue, which on successive applications by our client was adjourned to November 21, 2013.

On November 1, 2013, our client filed a motion seeking the bankruptcy court’s approval of proposed debtor-in-possession financing. On November 13, 2013, our client filed its plan of reorganization. The confirmation hearing for the plan of reorganization is currently scheduled for May 21, 2014. On November 15, 2013, our client signed a stipulation to modify and lift the automatic stay of the arbitration proceedings by the bankruptcy filing to permit the arbitration to proceed as to all issues other than issues related to our letters of credit, which stipulation was approved by the bankruptcy court. The court-approved stipulation also provided for the withdrawal of our client’s motion to draw on our letters of credit and a bar to re-filing such motion prior to March 1, 2014, absent exigent circumstances. Following the lifting of the bankruptcy stay, a scheduling conference was held by the arbitration panel in December 2013 and the panel extended the various procedural deadlines in the case. The final hearing is now set for the first and second quarters of 2015.

The debtor-in-possession financing facility was approved by the court on November 21, 2013. The plan of reorganization contemplates, and any funding from the debtor-in-possession financing is conditioned upon, the achievement of various milestones by specified dates. One of the milestones is the reduction to zero by the bankruptcy court of the value of our mechanics lien and the mechanics liens of the turbine and erection contractors through a “claims estimation” proceeding. Our client moved to compel claims estimation on December 11, 2013. We and the turbine and erection contractors opposed the motion on various grounds. The motion was set to be heard on February 7, 2014 but adjourned at the request of our client to February 12, 2014. On February 10, 2014, we agreed to a partial settlement of the outstanding claims under our supply contract with our client. Under the agreement, we will perform certain new work on the steam generation equipment in exchange for (i) a release from our client of liability for alleged defects in the steam generation equipment, (ii) restriction of our client’s right to draw on our letters of credit to disputes involving the new work, and (iii) a court-approved assignment of our client’s right to seek indemnification for the cost of the new work from the erection and turbine contractors. Also, under the agreement we will release our client from liability for our $14,800 in project claims related to delays, out of scope work, and improperly assessed delay liquidated damages in exchange for a court-approved assignment of our client’s right to seek indemnification for these claims from the turbine and erection contractors. The settlement agreement is subject to bankruptcy court approval, which approval was granted on March 7, 2014. The erection contractor has appealed the approval order, but has not applied to stay its enforcement during the pendency of the appeal. Accordingly, we are proceeding with the new work and intend to vigorously pursue in the arbitration our claims for the $14,800 in project claims and for the cost of the new work against the turbine and erection contractors. Our client’s claims estimation motion, which was adjourned pending approval by the agreement of the bankruptcy court, has now been withdrawn as against us.

Our letters of credit remain in place and we will vigorously oppose any attempt to draw down on them.

We cannot predict the ultimate outcome of this matter at this time.

Refinery and Petrochemicals Project Arbitration – India

In November 2012, we commenced arbitration in India against our client seeking collection of unpaid receivables in excess of £52,000 (approximately $86,600 based on the exchange rate in effect as of March 31, 2014), arising from services performed on a reimbursable basis for our client in connection with our client’s grass roots refinery and petrochemicals project in northeastern India. Our client rejected the claims and notified us of various potential

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counterclaims that it may be asserting in the arbitration, purportedly totaling in excess of £55,000 (approximately $91,600 based on the exchange rate in effect as of March 31, 2014). In June 2013, we submitted our detailed statement of claim, and in July 2013 our client submitted its detailed statement of defense and counterclaim. The amount of the counterclaim was increased to approximately £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) in damages, including among other claims a claim for lost profits due to delay in the execution of the project. The counterclaim concerns a number of alleged issues arising in connection with our execution of the engineering, procurement, and construction management scope of our contract, from the period from contract award until the subsequent transfer by our client of our remaining engineering, procurement and construction management scope to certain lump sum turnkey contractors hired directly by our client. Our client further contends that we are liable for delays to the project and has withheld payment on account of delay liquidated damages and, out of the total claim of £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) cited above, is seeking damages for lost profits in the amount of £555,000 (approximately $924,000 based on the exchange rate in effect as of March 31, 2014). We strongly dispute these contentions. Any liability for delay damages is capped under the contract at a specified percentage of our contract value, currently equivalent to approximately £11,500 (approximately $19,100 based on the exchange rate in effect as of March 31, 2014), an amount already retained by our client. The contract also excludes liability for consequential damages, including lost profits, and contains an overall cap on liability for claims in the aggregate of up to a specified percentage of our contract value, currently equivalent to approximately £28,800 (approximately $47,900 based on the exchange rate in effect as of March 31, 2014). The unpaid amount for which we are seeking reimbursement in the arbitration may increase should our client continue to withhold amounts from our invoices, as the project is still in execution. The arbitration panel has been formed. Our client moved to dismiss the arbitration as premature under the terms of the contract, and we opposed that motion. The motion has been denied by the panel. Also, pursuant to our request, the panel scheduled a hearing early in the first quarter of 2014 for our claims for unpaid receivables, along with our client’s counterclaim for a deductive change order in the amount of approximately £21,600 (approximately $36,000 based on the exchange rate in effect as of March 31, 2014). An initial session of that hearing took place in January 2014 and a further session is scheduled for May 2014. The remaining claims and counterclaims, including our client’s counterclaim for lost profits, are scheduled to be heard late in the fourth quarter of 2014. 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.

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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 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 questioned the amount of the invoice and based upon discussions with the USEPA, a revised invoice was received on June 17, 2013 for the reduced amount of $1,004. During the third quarter of 2013, FWEC received a USEPA invoice under the foregoing agreement for payment of $258 of response costs USEPA claims it incurred from March 2012 to February 2013. 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

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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.

Shareholder Class Action Lawsuits

Four putative class action lawsuits have been filed on behalf of Foster Wheeler AG shareholders against Foster Wheeler AG, or the Company, and the Board of Directors of Foster Wheeler AG, or the Board, seeking to enjoin the proposed acquisition of the Company by AMEC from proceeding. The first of such lawsuits was filed on March 4, 2014. Two of the lawsuits are pending in Texas state court and the other two lawsuits are pending in the United States District Court for the District of New Jersey. AMEC is named as a co-defendant in the two Texas state court lawsuits. The complaints contain similar, standardized allegations. Plaintiffs allege that the directors breached fiduciary duties owed to plaintiff and the Company’s other shareholders in pursuing the plan to sell the Company, and that the Company aided and abetted the defendant directors in committing such breach. In particular, plaintiffs allege that AMEC’s per share exchange offer to acquire all of the Company’s shares does not adequately compensate the Company’s shareholders for their investment and significantly undervalues the Company’s prospects as a standalone entity, that the consideration fails to take into account the value expected to be realized by AMEC as a result of the proposed acquisition, that the Board permitted Company management to lead the negotiations with AMEC when management was improperly incentivized to pursue the proposed acquisition, and that the Implementation Agreement improperly contains a number of deal protection devices designed to preclude any competing bids from emerging during the period following the announcement of the proposed acquisition in the Company’s Form 8-K filing. Plaintiffs are in the process of serving summonses and complaints upon the Company and its Board. No class has been constituted yet. The Company believes that the allegations are without merit and intends to vigorously oppose the lawsuits on behalf of itself and on behalf of its Board.

14. Discontinued Operations

During the first quarter of 2013, we recorded an impairment charge of $3,919 at our waste-to-energy facility in Camden, New Jersey 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 first quarter of 2013 was the result of updating our estimate related to the potential sale of the facility and the impairment charge was recorded within income from discontinued operations 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 less estimated costs to sell the facility.

On April 17, 2013, our Board of Directors approved a plan to sell our Camden facility and we completed the sale of the facility in August 2013. The presentation of the financial results and asset and liability balances of this business for the periods prior to the completion of the sale have been reclassified on our consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows under the respective captions related to discontinued operations, and these reclassifications have been made in the notes to our consolidated financial statements. Prior to the sale, the business had been classified on our consolidated balance sheet as of June 30, 2013 under the respective current and non-current captions of assets held for sale and liabilities held for sale as a result of our Board of Directors’ approval of our plan to sell the facility, which met the accounting criteria as a business held for sale and the criteria for classification as a discontinued operation. We did not recognize depreciation on long-lived assets while held for sale. Our Camden facility was formerly included in our Global Power Group business segment.

We completed the sale of our Camden facility in August 2013. Based on the proceeds received and costs of disposal, we recognized a gain of $300 within income/(loss) from discontinued operations before income taxes on the consolidated statement of operations during the quarter and nine months ended September 30, 2013.

Operating revenues related to our discontinued operations, which were exclusively in the U.S., were $6,144 during the three months ended March 31, 2013.

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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, 2013, which we refer to as our 2013 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 2013 Form 10-K, which we filed with the Securities and Exchange Commission, or SEC, on February 27, 2014, and the following, could cause business conditions and our results to differ materially from what is contained in forward-looking statements:

• the timing and success of the proposed offer and acquisition of us by AMEC plc;

• the risk that our business will be adversely impacted during the pending proposed offer and acquisition of us by AMEC plc;

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

• 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, natural disasters and/or adverse weather conditions 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-Continuing 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 the second quarter of 2013, we acquired an upstream consultancy business located in the United Kingdom that specializes in field development and project decision support, focused on the evaluation and implementation of oil and gas field developments covering greenfield and brownfield assets. Also during the second quarter of 2013, we acquired an engineering and project management business located in Mexico with experience in both offshore and onshore upstream oil and gas, downstream oil and gas and power projects. Additionally, during the first quarter of 2013, we acquired a U.S.-based business 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. The results of operations of these acquired businesses have been included in our Global E&C Group business segment.

The above acquisitions have been included in our consolidated financial results as of their respective acquisition dates and all of the acquisitions are included in our results of operation for the three months ended March 31, 2014. Throughout this Item 2, where period-to-period financial results have been impacted by these acquisitions, we have referred to these acquisitions as “businesses acquired subsequent to the three months ended March 31, 2013.”

In March 2014, we entered into a merger implementation agreement with MDM Engineering Group Limited (“MDM Engineering”), which is based in South Africa and is a minerals process and project management company focused on the mining industry. MDM Engineering provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. The transaction closing is expected to occur in the latter half of 2014 and upon closing, the results of operations of this business will be included within our Global E&C Group business segment.

We are also exploring acquisitions within the power generation industry to complement the products which our Global Power Group offers. During April 2014, we acquired certain assets of the Siemens Environmental Systems and Services business from Siemens Energy, Inc. in a cash transaction for a nominal amount. This business supplies and services clean air technologies for use in power plants and industrial facilities. The transaction closing is expected to occur in the second quarter of 2014 and upon closing, the results of operations of this business will be included within our Global Power Group business segment.

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 2014 and 2013.

On April 17, 2013, our Board of Directors approved a plan to sell our waste-to-energy facility in Camden, New Jersey and we completed the sale of the facility in August 2013. The presentation of the financial results and asset and liability balances of this business for the periods prior to the completion of the sale have been reclassified on our consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows under the respective captions related to discontinued operations. These reclassifications have also been made in the notes to our consolidated financial statements and in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section. Prior to the sale, the business had been classified on our consolidated balance sheet under the respective current and non-current captions of assets held for sale and liabilities held for sale and we did not recognize depreciation on long-lived assets while held for sale. Our Camden facility was formerly included in

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our Global Power Group business segment. We completed the sale of our Camden facility in August 2013 for a minimal gain. Please refer to Note 14 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our discontinued operations.

On February 13, 2014, we entered into an Implementation Agreement with AMEC plc (“AMEC”) relating to the acquisition of all of the issued and to be issued registered shares, par value CHF 3.00 per share, of Foster Wheeler AG (the “FW shares”) by AMEC. On the terms and subject to the conditions of the Implementation Agreement, AMEC will commence an exchange offer (the “Offer”) to acquire all of the FW shares. Please refer to Note 1 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding the AMEC Offer.

On February 26, 2014, our Board of Directors approved a proposal to our shareholders for a one-time dividend of $0.40 per share. Please refer to Note 1 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our proposed dividend.

Summary Financial Results for the Three Months Ended March 31, 2014 and 2013

Continuing Operations

Our summary financial results for the three months ended March 31, 2014 and 2013 from our continuing operations are as follows:

	Three Months Ended March 31,
	2014			2013
Consolidated Statement of Operations Data:
Operating revenues(1)	$	733,699		$	790,144
Contract profit(1)		115,535			119,446
Selling, general and administrative expenses(1)		82,047			90,332
Income attributable to Foster Wheeler AG	$	17,067		$	16,904
Earnings per share:
Basic	$	0.17		$	0.16
Diluted	$	0.17		$	0.16
Net cash used in operating activities (2)	$	(43,675	)	$	(36,114	)

⁽¹⁾  Please refer to the section entitled “—Results of Operations-Continuing 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 $527,867 and $556,190 as of March 31, 2014 and December 31, 2013, respectively.

Income from continuing operations attributable to Foster Wheeler AG was relatively unchanged during the first three months of 2014, compared to the same period of 2013. Income from continuing operations attributable to Foster Wheeler AG included the favorable pre-tax impact of the increase in EBITDA of $8,900 from our operating groups. Our Global E&C Group and our Global Power Group experienced increases in EBITDA of $4,900 and $4,000, respectively, during the first three months of 2014, compared to the same period of 2013. These increases in EBITDA from our operating groups were partially offset by an unfavorable change in EBITDA from our C&F Group of $4,200. The favorable pre-tax impact from increased EBITDA was offset by the unfavorable impact on our results of a higher effective tax rate during the first three months of 2014 of 39.4%, compared to an effective tax rate of 20.4% during the same period in 2013.

Please refer to the section entitled “—Results of Operations-Continuing Operations-Business Segments,” within this Item 2, for further discussion related to EBITDA results of our operating groups.

Discontinued Operations

Loss from discontinued operations attributable to Foster Wheeler AG during the first three months of 2013 included the impact of an impairment charge of $3,900. This business was sold in the third quarter of 2013. Please refer to Note 14 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our discontinued operations.

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New Orders and Backlog of Unfilled Orders

The tables below summarize our new orders and backlog of unfilled orders by period and include balances for discontinued operations for the quarter ended March 31, 2013, which were insignificant based on our consolidated and business group balances:

	Quarter Ended
	March 31, 2014		December 31, 2013		March 31, 2013
New orders, measured in terms of future revenues:
Global E&C Group*	$	560,700	$	535,600	$	467,700
Global Power Group		482,000		225,700		198,900
Total*	$	1,042,700	$	761,300	$	666,600

* Amounts for the Global E&C Group include flow-through revenues, as defined in the section entitled —“Results of Operations-Continuing Operations-Operating Revenues” within this Item 2, of $75,000, $124,000, and $69,400 for the quarters ended March 31, 2014, December 31, 2014 and March 31, 2013, respectively.

	As of
	March 31, 2014		December 31, 2013
Backlog of unfilled orders, measured in terms of future revenues	$	4,225,400	$	4,004,600
Backlog, measured in terms of Foster Wheeler scope*	$	3,846,700	$	3,578,400
Global E&C Group man-hours in backlog (in thousands)		21,200		21,400

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

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

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, refined products and minerals and metals. While both of our business groups have been impacted by unfavorable economic growth rates in most of their respective global markets in recent years, global economic activity has strengthened since the latter portion of 2013 and we believe that it will continue to strengthen during 2014. However, there are a number of risks to the strengthening economic outlook: increased risks related to slower growth than anticipated in the emerging market economies; risk of lower-than-expected inflation in advanced economies, particularly the Eurozone, where persistent low inflation could harm the fragile economic recovery by reducing consumer spending and impacting the ability of governments and businesses to repay debt; and increased geopolitical risks. In addition, the political and civil situation in Ukraine has the potential to negatively impact project investment in the region, including Russia, and disrupt our ability to transact business in the surrounding region. If any of these risks materialize, the ability of both of our business groups to book work could be negatively impacted, which could have a material negative impact on our business.

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, minerals 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 are experiencing intense competition among engineering and construction contractors and pricing pressure for contracts awarded. Clients’ bidding and contract award processes continue to be protracted 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 planned projects. This includes a pipeline of projects in North America which continues to strengthen both in chemicals and natural gas liquefaction, or LNG, due to the availability of cheap gas supply from shale gas. The challenges and drivers for our Global E&C Group are discussed in more detail in the section entitled “—Results of Operations-Continuing Operations-Business Segments-Global E&C Group-Overview of Segment,” within this Item 2.

Global gross domestic product, or GDP, growth is a key driver of demand for power. The slow economic growth in recent years has negatively impacted the demand for our products and services. However, we believe that a gradual upturn in global economic growth will continue to strengthen as we progress through 2014, which we further believe

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will improve demand for the products and services of our Global Power Group, compared to recent years. 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 in certain geographies and the outlook for continued lower natural gas pricing over the next three to five years in North America, driven by an increasing supply of natural gas, which has increased the attractiveness of natural gas, in relation to coal, 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 ability to book work and which could have a material negative impact on our Global Power Group’s business. The challenges and drivers for our Global Power Group are discussed in more detail in the section entitled “—Results of Operations-Continuing Operations-Business Segments-Global Power Group-Overview of Segment,” within this Item 2.

Results of Operations – Continuing Operations

The following sections provide a discussion of our results of operations from our continuing operations.

Operating Revenues

Our operating revenues by geographic region, based upon where our projects are being executed, for the three months ended March 31, 2014 and 2013, were as follows:

	Three Months Ended March 31,
	2014		2013		$ Change			% Change
Africa	$	13,169	$	18,912	$	(5,743	)		(30.4	)%
Asia Pacific		221,827		193,013		28,814			14.9	%
Europe		144,446		188,189		(43,743	)		(23.2	)%
Middle East		114,397		64,923		49,474			76.2	%
North America		185,960		241,594		(55,634	)		(23.0	)%
South America		53,900		83,513		(29,613	)		(35.5	)%
Total	$	733,699	$	790,144	$	(56,445	)		(7.1	)%

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

Our operating revenues for each of our business groups for the three months ended March 31, 2014 and 2013 were as follows:

	Three Months Ended March 31,
	2014		2013		$ Change			% Change
Global E&C Group	$	553,261	$	587,974	$	(34,713	)		(5.9	)%
Global Power Group		180,438		202,170		(21,732	)		(10.7	)%
Total	$	733,699	$	790,144	$	(56,445	)		(7.1	)%

Our operating revenues decreased in the three months ended March 31, 2014, compared to the same period in 2013, primarily as a result of decreased flow-through revenues of $54,200, as described below. The decrease was net of the favorable impact in 2014 related to two businesses acquired by our Global E&C Group subsequent to the three months ended March 31, 2013. Excluding the impact of the change in flow-through revenues and currency fluctuations, our operating revenues were flat in the three months ended March 31, 2014, compared to the same period in 2013, which was the net result of increased operating revenues in our Global E&C Group, offset by decreased operating revenues in our Global Power Group.

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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.

Contract Profit

Three Months Ended March 31,
2014		2013		$ Change			% Change
$	115,535	$	119,446	$	(3,911	)		(3.3	)%

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, 2014, compared to the same period in 2013. The decrease was the result of decreased contract profit by both our Global E&C Group and our Global Power Group.

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,
2014		2013		$ Change			% Change
$	82,047	$	90,332	$	(8,285	)		(9.2	)%

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

SG&A expenses decreased in the first three months of 2014, compared to the same period in 2013, primarily as a result of decreased sales pursuit costs of $5,600, decreased general overhead costs of $1,300 and the favorable impact resulting from the inclusion of a charge for severance-related postemployment benefits of $1,400 recognized in the first three months of 2013. The severance-related postemployment benefits charge of $1,400 recognized in the first three months of 2013 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,
2014		2013		$ Change		% Change
$	6,140	$	4,751	$	1,389		29.2	%

Other income, net in the three months ended March 31, 2014 consisted primarily of equity earnings of $4,300 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 and our Global E&C Group’s projects in Italy were $2,800 and $1,200, respectively, during the three months ended March 31, 2014.

Other income, net increased in the first three months of 2014, compared to the same period in 2013. The increase included the impact of increased equity earnings of $300, which included the net impact of increased equity earnings in our Global E&C Group’s project in Italy of $1,300 and decreased equity earnings in our Global Power Group’s project in Chile of $1,400 as well as a net increase in equity earnings of $400 from our remaining projects. Additionally, the increase in other income, net included increased value-added tax refunds of $600 and increased governmental economic subsidies and other non-income-based tax credits of $200.

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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.

Other Deductions, net

Three Months Ended March 31,
2014		2013		$ Change		% Change
$	10,703	$	5,312	$	5,391		101.5	%

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 2014 consisted primarily of legal fees of $9,000, which increased $3,500 in the first three months of 2014, compared to the same period in 2013. The increase in the first three months of 2014, compared to the same period in 2013, was primarily related to increased legal fees related to the Offer by AMEC.

Interest Income

Three Months Ended March 31,
2014		2013		$ Change			% Change
$	1,403	$	1,462	$	(59	)		(4.0	)%

Interest income was relatively unchanged in the three months ended March 31, 2014, compared to the same period in 2013, which was the net result of lower investment yields on cash and cash equivalents balances, substantially offset by higher average cash and cash equivalents balances.

Interest Expense

Three Months Ended March 31,
2014		2013		$ Change		% Change
$	3,662	$	2,672	$	990		37.1	%

Interest expense increased in the three months ended March 31, 2014, compared to the same period in 2013, primarily as a result of increased interest expense on uncertain tax positions, partially offset by the favorable impact from decreased average borrowings, excluding foreign currency translation effects.

Net Asbestos-Related Provision

Three Months Ended March 31,
2014		2013		$ Change		% Change
$	2,008	$	2,000	$	8		N/M

N/M - Not meaningful.

The net asbestos-related provision was relatively unchanged during the first three months of 2014, compared to the same period in 2013.

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Provision for Income Taxes

	Three Months Ended March 31,
	2014			2013			$ Change		% Change
Provision for income taxes	$	9,718		$	5,160		$	4,558		88.3	%
Effective tax rate		39.4	%		20.4	%

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 2014

Our effective tax rate for the first three months of 2014 was greater than the U.S. statutory rate of 35% primarily because of the disproportionately higher share of losses from jurisdictions where we are unable to recognize a tax benefit because of a valuation allowance. However, we expect the effective tax rate for the first quarter to be an exception and not indicative of the remaining quarters in 2014.

The increase in our effective tax rate for the first three months of 2014 was higher than the U.S. statutory rate of 35% primarily due to the net impact of the following:

• During the first three months of 2014, income earned in non-U.S. jurisdictions contributed to an approximate 11-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. We anticipate a similar impact on our 2014 full-year effective tax rate; and

• During the first three months of 2014, 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 16-percentage point increase in our effective tax rate. We do not anticipate this adjustment to be representative of the impact on our 2014 full-year effective tax rate. We expect the impact of losses subject to a valuation allowance to have a minimal impact on our 2014 full-year 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 contributed to an approximate 17-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 six-percentage point increase in our effective tax rate.

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 2025 and beyond, based on current tax laws.

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Net (Loss)/Income Attributable to Noncontrolling Interests

Three Months Ended March 31,
2014			2013		$ Change			% Change
$	(2,127	)	$	3,279	$	(5,406	)		(164.9	)%

Net (loss)/income attributable to noncontrolling interests represents third-party ownership interests in the net (loss)/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 (loss)/income attributable to noncontrolling interests is based upon changes in the net (loss)/income of these subsidiaries and/or changes in the noncontrolling interests’ ownership interest in the subsidiaries.

Net income attributable to noncontrolling interests decreased during the first three months of 2014, compared to the same period in 2013, which was primarily the result of a decrease in net income from our subsidiaries in Malaysia, which experienced a net loss during the first three months of 2014, and a change in the project’s fee structure and allocation of earnings to our noncontrolling interest at our subsidiary in Martinez, California. Please refer to the section entitled “—Business Segments-Global Power Group,” within this Item 2, for further discussion related to a change in the allocation of earnings to our noncontrolling interest at our subsidiary in Martinez, California.

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,
2014		2013		$ Change		% Change
$	44,762	$	40,078	$	4,684		11.7	%

EBITDA increased in the first three months of 2014, compared to the same period in 2013. This increase was the result of an increase in EBITDA of $8,900 from our operating groups. Our Global E&C Group and our Global Power Group experienced increases in EBITDA of $4,900 and $4,000, respectively, during the first three months of 2014, compared to the same period of 2013. These increases in EBITDA from our operating groups were partially offset by an unfavorable change in EBITDA in our C&F Group of $4,200, which was primarily related to increased legal fees in connection with the Offer by AMEC. Please refer to Note 1 to the consolidated financial statements included in this quarterly report on Form 10-Q for further information related to the Offer by AMEC.

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 EBITDA, as defined in such agreement, in the covenant calculations which is different than EBITDA as presented herein. 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;

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• 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.

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

	Three Months Ended March 31,
	2014			2013
EBITDA from continuing operations:
Global E&C Group	$	40,054		$	35,188
Global Power Group		28,726			24,687
C&F Group *		(24,018	)		(19,797	)
EBITDA from continuing operations		44,762			40,078
Less: Interest expense		3,662			2,672
Less: Depreciation and amortization		14,315			15,342
Less: Provision for income taxes		9,718			5,160
Income from continuing operations attributable to Foster Wheeler AG		17,067			16,904
Loss from discontinued operations**		—			(3,878	)
Net income attributable to Foster Wheeler AG	$	17,067		$	13,026

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

** Loss from discontinued operations 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. Please refer to Note 14 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,
	2014		2013
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions: (1)
Global E&C Group	$	3,300	$	10,500
Global Power Group		9,900		8,500
Total	$	13,200	$	19,000
Net asbestos-related provision in our C&F Group(2)	$	2,000	$	2,000
Charges for severance-related postemployment benefits:
Global E&C Group	$	900	$	1,200
Global Power Group		100		400
C&F Group		—		400
Total	$	1,000	$	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) Please refer to Note 13 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 2013 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.

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Business Segments

Global E&C Group

	Three Months Ended March 31,
	2014		2013		$ Change			% Change
Operating revenues	$	553,261	$	587,974	$	(34,713	)		(5.9	)%
EBITDA	$	40,054	$	35,188	$	4,866			13.8	%

Results

Our Global E&C Group’s operating revenues by geographic region for the three months ended March 31, 2014 and 2013, based upon where our projects are being executed, were as follows:

	Three Months Ended March 31,
	2014		2013		$ Change			% Change
Africa	$	13,169	$	18,912	$	(5,743	)		(30.4	)%
Asia Pacific		121,385		117,226		4,159			3.5	%
Europe		133,416		129,751		3,665			2.8	%
Middle East		113,493		62,078		51,415			82.8	%
North America		126,148		181,456		(55,308	)		(30.5	)%
South America		45,650		78,551		(32,901	)		(41.9	)%
Total	$	553,261	$	587,974	$	(34,713	)		(5.9	)%

Our Global E&C Group experienced a decrease in operating revenues of 6% in the first three months of 2014, compared to the same period in 2013. The decrease in the period was primarily driven by decreased flow-through revenues of $53,600. Excluding the impact of flow-through revenues and foreign currency fluctuations, our Global E&C Group’s operating revenues increased 6% in the first three months of 2014, compared to the same period in 2013, which included the favorable impact in 2014 of our two acquisitions acquired after the three months ended March 31, 2013. 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 increased in the first three months of 2014, compared to the same period in 2013. The increase in EBITDA was primarily driven by decreased sales pursuit costs of $4,500, increased equity earnings from our projects in Italy of $1,300 and the favorable 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 our consolidated statement of operations, partially offset by decreased contract profit of $3,300, which was net of the impact in 2014 of our two business acquisitions acquired after the three months ended March 31, 2013.

The decrease in contract profit noted above 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, LNG export 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 minerals and metals 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 owns and operates electric power generating wind farms in Italy and also owns a noncontrolling interest in two electric power generation projects, one waste-to-energy project and one wind farm project, all of which are located in Italy, and a noncontrolling interest in a joint venture company that is fully licensed to engineer, procure and construct processing facilities in China.

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, minerals and pharmaceuticals will continue to grow over the long-term and that our clients will continue to invest in new and upgraded capacity to meet that demand.

Global markets in the engineering and construction industry are still experiencing intense competition among engineering and construction contractors and pricing pressure for contracts awarded. Clients’ bidding and contract award processes continue to be 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. However, we are seeing clients continuing to develop new projects and, after making final investment decisions, moving forward with planned projects. This includes a pipeline of projects in North America which continues to strengthen both in chemicals and natural gas liquefaction, or LNG, due to the availability of cheap gas supply from shale gas.

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While our Global E&C Group has been impacted by unfavorable economic growth rates in most of its global markets in recent years, global economic activity has strengthened since the latter portion of 2013 and we believe that it will continue to strengthen during 2014. However, there are a number of risks to the strengthening economic outlook: increased risks related to slower growth than anticipated in the emerging market economies; risk of lower-than-expected inflation in advanced economies, particularly the Eurozone, where persistent low inflation could harm the fragile economic recovery by reducing consumer spending and impacting the ability of governments and businesses to repay debt; and increased geopolitical risks. In addition, the political and civil situation in Ukraine has the potential to negatively impact project investment in the region, including Russia, and disrupt our ability to transact business in the surrounding region. If any of these risks materialize, our Global E&C Group’s ability to book work could be negatively impacted, which could have a material negative impact on our business.

We continue to be successful in booking contracts of varying types and sizes in our key end markets, including a front-end engineering design, or FEED, contract for a new refinery in the Middle East, a FEED contract for a residue upgrading project at a South Korean refinery, a project management consultancy contract for an expansion of an LNG import and gasification terminal in Asia, a FEED and engineering, procurement and construction management, or EPCM, contract for a base oil project in Europe, an EPCM services contract for an expansion at an industrial facility in the U.S., an EPCM services contract for a waste to energy facility in Europe, a construction management contract for a biotech facility expansion in Europe, a further project management consultancy release for a refinery expansion in Latin America, further detailed engineering work for a refinery upgrading project in Europe, a study, FEED and engineering contract for shale gas processing facilities in the U.S., further releases of engineering and procurement work for the revamp of a chemicals facility in the U.S., a program management contract for a new pharmaceuticals facility in the U.S., an EPCM and validation contract for a pharmaceuticals facility upgrade in Europe, an initial engineering, procurement and construction release for a residue upgrading project in Europe, an engineering and material supply, or EMS, contract for steam reformer heaters for two refineries: one in Russia and one in Central Asia, an EMS contract for a carbon monoxide boiler package for a new refinery in Asia, an engineering, procurement and related services contract for an oilfield development in Iraq and a contract for pre-FEED and FEED for an LNG import and regasification terminal in Kuwait.

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,
	2014		2013		$ Change			% Change
Operating revenues	$	180,438	$	202,170	$	(21,732	)		(10.7	)%
EBITDA	$	28,726	$	24,687	$	4,039			16.4	%

Results

Our Global Power Group’s operating revenues by geographic region for the three months ended March 31, 2014 and 2013, based upon where our projects are being executed, were as follows:

	Three Months Ended March 31,
	2014		2013		$ Change			% Change
Asia Pacific	$	100,442	$	75,787	$	24,655			32.5	%
Europe		11,030		58,438		(47,408	)		(81.1	)%
Middle East		904		2,845		(1,941	)		(68.2	)%
North America		59,812		60,138		(326	)		(0.5	)%
South America		8,250		4,962		3,288			66.3	%
Total	$	180,438	$	202,170	$	(21,732	)		(10.7	)%

Our Global Power Group experienced decreased operating revenues in the first three months of 2014, compared to the same period in 2013. The decrease was primarily attributable to decreased volume of business and a change in the operations and maintenance fee structure at one of our build, own and operate projects in the U.S. that resulted in a decrease in operating revenues of $10,600. Please see the section below entitled “U.S. Build, Own and Operate Project” for additional information. Excluding the impact of this U.S. build, own and operate project and foreign currency fluctuations, our Global Power Group’s operating revenues decreased 6% in the first three months of 2014, compared to the same period in 2013. Please refer to the “—Overview of Segment” section below for a discussion of our Global Power Group’s market outlook.

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Our Global Power Group’s EBITDA increased in the first three months of 2014, compared to the same period in 2013. The increase in EBITDA included the impact of decreased SG&A expenses of $2,000 and the favorable impact related to the change in net foreign exchange transaction gains and losses of $1,200. Additionally, contract profit, excluding the change related to our U.S. build, own and operate project described below, contributed an increase in EBITDA of $800 as a result of increased contract profit margins, partially offset by decreased volume of operating revenues. The above items which increased EBITDA were partially offset by decreased equity earnings from our Global Power Group’s project in Chile of $1,400.

Our equity earnings from our project in Chile were $2,800 and $4,200 in the first three months of 2014 and 2013, respectively. The decrease in equity earnings in the first three months of 2014, compared to the same period in 2013, was primarily driven by a reversal of a risk contingency in the first quarter of 2013 associated with the insurance proceeds received by our project in Chile in connection with its 2010 earthquake loss. Excluding this item, equity earnings would have shown an increase when comparing the first three months of 2014 to the same period in 2013.

U.S. Build, Own and Operate Project

Martinez Cogen Limited Partnership, or MCLP, a limited liability partnership which is a majority-owned subsidiary of our Global Power Group, owns and operates a combined-cycle gas turbine facility located in Martinez, California. MCLP produces electric power and steam, and its primary customer is a refinery. During the first three months of 2013, MCLP earned revenues from the sale of power and steam to the refinery and of electric power to the grid. Pursuant to a new agreement effective in May 2013 between MCLP and the refinery, in lieu of product sales, all costs of operation are passed through to the refinery and MCLP receives a management fee. This change in fee structure resulted in a decrease in operating revenue of $10,600 during the first three months of 2014, compared to the same period in 2013, which in turn resulted in a decrease in contract profit of $1,800.

In 2013, pursuant to the partnership agreement between the MCLP partners, our Global Power Group’s ownership interest in MCLP increased to 99%. Our Global Power Group’s financial results for its interest in MCLP reflect this change in ownership percentage. The change in ownership interests resulted in decreased earnings to the noncontrolling interest. The foregoing changes to the project’s fee structure and allocation of earnings resulted in a minimal impact to our Global Power Group’s EBITDA during the first three months of 2014, compared to the same period in 2013.

Overview of Segment

Our Global Power Group designs, manufactures and installs steam generators and auxiliary equipment for electric power generating stations, district heating and power plants and industrial facilities worldwide. We believe 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. Our Global Power Group’s steam generators utilize a broad range of technologies, offering independent power producers, utilities, municipalities and industrial clients 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. 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. 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 numerous other materials.

Additionally, our Global Power Group holds a controlling interest in 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.

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.

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

• A broad range of site services including construction and erection services, plant maintenance, steam generator upgrading and life extension, engineering and replacement parts, improving plant environmental performance and plant repowering.

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

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

While our Global Power Group has been impacted by unfavorable economic growth rates in most of its global markets in recent years, global economic activity has strengthened since the latter portion of 2013 and we believe that it will continue to strengthen during 2014. We believe opportunities will continue in Asia, the Middle East and South America driven by growing electricity demand as a result of the economic growth rates in those regions. However, there are a number of risks to the strengthening economic outlook: increased risks related to slower growth than anticipated in the emerging market economies; risk of lower-than-expected inflation in advanced economies, particularly the Eurozone, where persistent low inflation could harm the fragile economic recovery by reducing consumer spending and impacting the ability of governments and businesses to repay debt; and increased geopolitical risks. In addition, the political and civil situation in Ukraine has the potential to negatively impact project investment in the region, including Russia, and disrupt our ability to transact business in the surrounding region.

There are also a number of other constraining market factors that continue to impact the power 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 due to 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, driven by increasing supply of natural gas, has increased the attractiveness of natural gas, in relation to coal, 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 ability to book work and which could have a material negative impact on our Global Power Group’s business.

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 we believe significantly improves power plant efficiency and reduces power plant emissions.

We are currently executing a project for four 550 megawatt electrical, or MWe, supercritical CFB steam generators for a power project in South Korea. We believe this project shows a growing acceptance of CFB technology in the large utility boiler market sector, which provides a growing market opportunity for our CFB technology. Further, this project will allow us to demonstrate our most advanced CFB design featuring vertical-tube, once-through ultra-supercritical steam technology. 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 MWe) CFB steam generator, which incorporates our carbon-capturing Flexi-Burn^TM technology. The pilot plant began successfully capturing CO₂ in September 2012.

Recently we were awarded a contract to design and supply two 255 MWe CFB steam generator islands in Turkey, which will include flue gas cleaning with two of our CFB scrubbers. We also were awarded a design and supply contract in Vietnam for two 300 MWe pulverized coal arch fired units. In addition, we received contracts for two 60 MWe grate boilers to be located at a sugar mill in Pakistan and for two of our package boilers, designed to produce over 300 thousand pounds per hour of superheated steam at a steam plant with expanded scope in the U.S.

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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, 2014		December 31, 2013		$ Change			% Change
Cash and cash equivalents	$	527,867	$	556,190	$	(28,323	)		(5.1	)%
Restricted cash		53,580		82,867		(29,287	)		(35.3	)%
Total	$	581,447	$	639,057	$	(57,610	)		(9.0	)%

Total cash and cash equivalents and restricted cash held by our non-U.S. entities as of March 31, 2014 and December 31, 2013 were $450,100 and $493,000, respectively.

During the first three months of 2014, we experienced a decrease in cash and cash equivalents of $28,300. The decrease in cash and cash equivalents included cash used in operating activities of $43,700, distributions to noncontrolling interests of $6,700 and capital expenditures of $5,800. The above use of cash was partially offset by a decrease in restricted cash, excluding foreign currency translation effects, of $29,300 and proceeds received from the exercise of stock options of $1,700.

Cash Flows from Operating Activities

	Three Months Ended March 31,
	2014			2013			$ Change
Net cash used in operating activities — continuing operations	$	(43,675	)	$	(36,114	)	$	(7,561	)

Net cash used in operating activities in the first three months of 2014 primarily resulted from cash used for working capital of $53,800, cash used for net asbestos-related payments of $14,800 and mandatory contributions to our non-U.S. pension plans of $5,400, partially offset by cash provided by net income of $32,400, which excluded non-cash charges of $17,400.

The increase in net cash used in operating activities of $7,600 in the first three months of 2014, compared to the same period of 2013, resulted primarily from decreased cash provided by net income excluding non-cash charges of $8,200.

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 2014 and 2013, 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 and contributed to our receivables balance. Project payments can be delayed, particularly on contracts involving national oil companies, due to those customers’ internal processes for approval of invoices and release of funds.

In particular, we had $57,600 and $54,400, as of March 31, 2014 and December 31, 2013, respectively, of accounts receivable due from the national oil company in Venezuela. Although the payment history of this client is good, payments continue to be significantly delayed. In general, a delay in payment by our customers is not indicative of customer credit risk. In other cases where payments are delayed due to disagreements between us and our clients regarding the level of or quality of work performed or regarding billing terms, we assess our contractual right to invoice the client and, if we believe there is a probable commercial risk to collection of contract revenues, we provide an allowance against the valuation of contract work in progress at the individual contract level.

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.

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Cash Flows from Investing Activities

	Three Months Ended March 31,
	2014		2013			$ Change
Net cash provided by/(used in) investing activities — continuing operations	$	23,577	$	(14,956	)	$	38,533

The net cash provided by investing activities in the first three months of 2014 was attributable primarily to a decrease in restricted cash, excluding foreign currency translation effects, of $29,300, partially offset by capital expenditures of $5,800.

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 $17,600.

The capital expenditures in the first three months of 2014 and 2013 related primarily to leasehold improvements, information technology equipment and office equipment.

Cash Flows from Financing Activities

	Three Months Ended March 31,
	2014			2013			$ Change
Net cash used in financing activities	$	(5,301	)	$	(44,536	)	$	39,235

The net cash used in financing activities in the first three months of 2014 was attributable primarily to cash used for distributions to noncontrolling interests of $6,700, partially offset by cash received from the exercise of stock options of $1,700.

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.

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, our 2014 acquisition activity, as described below, our proposed dividend payment, as described below, capital expenditures, mandatory pension contributions and net asbestos-related payments. We may also use cash at our discretion for additional acquisitions or discretionary pension plan contributions. 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 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.

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 the proposed dividend payment. 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.

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Our net asbestos-related cash payments are predominately related to our U.S. subsidiaries and include indemnity and defense costs, net of insurance proceeds. During the first three months of 2014, we had net asbestos-related cash outflows of approximately $14,800. We expect our U.S. net cash outflows for the full year 2014 to be approximately $32,100. This estimate assumes no 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 five-year senior unsecured credit agreement, which replaced our amended and restated senior unsecured credit agreement from July 2010. Our senior credit agreement provides for a facility 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 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 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 $304,500 and $253,900 of letters of credit outstanding under our senior credit agreement as of March 31, 2014 and December 31, 2013, respectively. There were no funded borrowings under our senior credit agreement as of March 31, 2014 and December 31, 2013. Based on our current operating plans and cash forecasts, we do not intend to borrow under our senior credit agreement to meet our non-discretionary liquidity needs 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 2014 based on the minimum statutory funding requirements. We made mandatory contributions totaling approximately $5,400 to our non-U.S. pension plans during the first three months of 2014. Based on the minimum statutory funding requirements for 2014, we expect to make mandatory contributions totaling approximately $23,300 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 2014.

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, 2014, we were authorized to repurchase up to an additional $270,054 of our outstanding shares as of such date. 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, 2014, we have repurchased 50,502,778 shares for an aggregate cost of approximately $1,234,344 since the inception of the repurchase program announced on September 12, 2008. 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.

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During the first three months of 2014, we entered into a merger implementation agreement with MDM Engineering Group Limited to acquire all of their ordinary shares and options. Our aggregate cash needs related to this acquisition will be approximately $109,000. During April 2014, we acquired certain assets of the Siemens Environmental Systems and Services business from Siemens Energy, Inc. in a cash transaction for a nominal amount. Please refer to Note 2 to the consolidated financial statements in this quarterly report on Form 10-Q for further information regarding these agreements.

On February 26, 2014, our Board of Directors approved a proposal to our shareholders for a one-time dividend of $0.40 per share. We intend to ask our shareholders to approve this dividend at our Annual General Meeting on May 7, 2014 and, subject to shareholder approval, this dividend will be paid shortly after our Annual General Meeting. This dividend is not linked to, and not conditional on, the closing of the Offer. The covenants of our senior unsecured credit agreement do not limit our ability to pay this proposed dividend and we expect that there will be no Swiss withholding taxes on the dividend.

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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New Orders and Backlog

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.

Backlog can fluctuate from one reporting period to the next due to the timing of new awards and when the contract revenue is recognized in our consolidated financial statements. The timing and duration of backlog execution is dependent upon the scope and type (or nature) of the work being executed. The elapsed time from the award of a contract to completion of performance can be as short as several quarters and may be up to approximately four years. At any point in time, our backlog contains a portfolio of contracts at various stages of completion and that will be executed at varying rates over varying durations. We cannot predict with certainty the portion of backlog to be performed in a given year.

Although backlog represents only business that is considered likely to be performed, cancellations or scope adjustments may and do occur. 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. 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.

The tables below detail our new orders and backlog of unfilled orders by period and include balances for discontinued operations for the three months ended March 31, 2013, which were insignificant based on our consolidated and business group balances:

New Orders, Measured in Terms of Future Revenues

	Three Months Ended
	March 31, 2014						March 31, 2013
	Global E&C Group		Global Power Group		Total		Global E&C Group		Global Power Group		Total
By Project Location:
Africa	$	2,800	$	—	$	2,800	$	16,000	$	—	$	16,000
Asia Pacific		111,200		339,200		450,400		55,100		116,900		172,000
Europe		147,900		23,400		171,300		122,800		37,300		160,100
Middle East		96,900		37,300		134,200		43,200		200		43,400
North America		179,800		74,900		254,700		187,400		40,300		227,700
South America		22,100		7,200		29,300		43,200		4,200		47,400
Total	$	560,700	$	482,000	$	1,042,700	$	467,700	$	198,900	$	666,600
By Industry:
Power generation	$	55,100	$	469,400	$	524,500	$	1,500	$	172,800	$	174,300
Oil refining		209,800		—		209,800		265,300		—		265,300
Pharmaceutical		52,900		—		52,900		15,000		—		15,000
Oil and gas		100,800		—		100,800		66,700		—		66,700
Chemical/petrochemical		99,200		—		99,200		87,400		—		87,400
Power plant design, operation and maintenance		26,200		12,600		38,800		11,300		26,100		37,400
Environmental		1,200		—		1,200		2,400		—		2,400
Other, net of eliminations		15,500		—		15,500		18,100		—		18,100
Total	$	560,700	$	482,000	$	1,042,700	$	467,700	$	198,900	$	666,600

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Backlog, Measured in Terms of Future Revenues

	As of March 31, 2014						As of December 31, 2013
	Global E&C Group		Global Power Group		Total		Global E&C Group		Global Power Group		Total
By Contract Type:
Lump-sum turnkey	$	—	$	38,500	$	38,500	$	22,300	$	7,200	$	29,500
Other fixed-price		538,400		847,300		1,385,700		484,600		581,900		1,066,500
Reimbursable		2,779,200		22,000		2,801,200		2,889,600		19,000		2,908,600
Total	$	3,317,600	$	907,800	$	4,225,400	$	3,396,500	$	608,100	$	4,004,600
By Project Location:
Africa	$	25,700	$	—	$	25,700	$	36,700	$	100	$	36,800
Asia Pacific		554,400		594,500		1,148,900		579,700		342,800		922,500
Europe		473,500		108,500		582,000		462,300		114,000		576,300
Middle East		778,500		38,400		816,900		837,500		1,700		839,200
North America		1,213,500		144,200		1,357,700		1,177,100		124,300		1,301,400
South America		272,000		22,200		294,200		303,200		25,200		328,400
Total	$	3,317,600	$	907,800	$	4,225,400	$	3,396,500	$	608,100	$	4,004,600
By Industry:
Power generation	$	60,800	$	872,400	$	933,200	$	27,800	$	572,000	$	599,800
Oil refining		1,518,700		—		1,518,700		1,562,100		—		1,562,100
Pharmaceutical		71,400		—		71,400		44,500		—		44,500
Oil and gas		283,500		—		283,500		302,800		—		302,800
Chemical/petrochemical		1,187,200		—		1,187,200		1,247,400		—		1,247,400
Power plant design, operation and maintenance		135,800		35,400		171,200		152,000		36,100		188,100
Environmental		4,000		—		4,000		5,400		—		5,400
Other, net of eliminations		56,200		—		56,200		54,500		—		54,500
Total	$	3,317,600	$	907,800	$	4,225,400	$	3,396,500	$	608,100	$	4,004,600
Backlog, measured in terms of Foster Wheeler Scope	$	2,940,500	$	906,200	$	3,846,700	$	2,973,200	$	605,200	$	3,578,400
Global E&C Group Man-hours in Backlog (in thousands)		21,200				21,200		21,400				21,400

The foreign currency translation impact on backlog and Foster Wheeler scope backlog resulted in decreases of $3,700 and $2,600, respectively, as of March 31, 2014 compared to December 31, 2013.

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 2013 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 2014.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first three months of 2014, 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, 2013.

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, 2014 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 13 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, 2013. 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 2014.

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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.

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 2014.

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, 2014 through January 31, 2014		—	$	—		—
February 1, 2014 through February 28, 2014		—		—		—
March 1, 2014 through March 31, 2014		—		—		—
Total		—	$	—		—	$	270,054

⁽¹⁾  No shares were repurchased pursuant to our share repurchase program during the first quarter of 2014. As of March 31, 2014, we were authorized to spend up to an additional $270,054 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, 2014, an aggregate of 50,502,778 shares were purchased for a total of $1,234,344 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
2.1	Implementation Agreement relating to the acquisition of Foster Wheeler AG by AMEC plc, dated February 13, 2014, by and between AMEC plc and Foster Wheeler AG (schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K). (Filed as Exhibit 2.1 to Foster Wheeler AG’s Form 8-K, filed on February 13, 2014, and incorporated herein by reference.)
2.2	Letter Agreement, dated March 28, 2014, regarding that certain Implementation Agreement, dated February 13, 2014, by and between AMEC plc and Foster Wheeler AG.
3.1	Articles of Association of Foster Wheeler AG.
10.1	First Amendment to the Contract of Employment between Foster Wheeler Management Limited and Stephen Rostron, dated as of March 3, 2014, effective as of August 27, 2013.
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 7, 2014	/s/ J. KENT MASTERS
	J. KENT MASTERS
	PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: May 7, 2014	/s/ FRANCO BASEOTTO
	FRANCO BASEOTTO
	EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER

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