-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ArNZVx8kuoemcYk1ad1AFmVGcwPX+fpQIyGz0PhBTBETs17vooJ96ptqGXUjNk2H TEsCXD5xCt+IgWXaBA8IIQ== 0000950123-96-006375.txt : 19961113 0000950123-96-006375.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950123-96-006375 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960927 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOSTER WHEELER CORP CENTRAL INDEX KEY: 0000038321 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 131855904 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00286 FILM NUMBER: 96658262 BUSINESS ADDRESS: STREET 1: PERRYVILLE CORPORATE PARK CITY: CLINTON STATE: NJ ZIP: 08809 BUSINESS PHONE: 9087304090 10-Q 1 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 1996 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 1-286-2 FOSTER WHEELER CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) New York 13-1855904 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Perryville Corporate Park, Clinton, N. J. 08809-4000 - ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (908) 730-4000 (Not Applicable) ------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 the number of shares outstanding of each of the issuer's classes of common stock, as of September 27, 1996 was 40,640,437 shares. 2 FOSTER WHEELER CORPORATION INDEX Page No. -------- Part I Financial Information: Item 1 - Financial Statements: Condensed Consolidated Balance Sheet at September 27, 1996 and December 29, 1995 2 Condensed Consolidated Statement of Earnings Three and Nine Months Ended September 27, 1996 and September 29, 1995 3 Condensed Consolidated Statement of Cash Flows Nine Months Ended September 27, 1996 and September 29, 1995 4 Notes to Condensed Consolidated Financial Statements 5 - 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 11 Part II Other Information: Item 6 - Exhibits and Reports on Form 8-K 12 - 1 - 3 PART I. FINANCIAL INFORMATION FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 1. - FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF DOLLARS)
September 27, 1996 December 29, ASSETS (Unaudited) 1995 - ------ ----------- ----------- Current Assets: Cash and cash equivalents $ 200,275 $ 167,131 Short-term investments 140,969 112,853 Accounts and notes receivable 750,440 715,739 Contracts in process 386,100 340,526 Inventories 36,159 42,716 Prepaid and refundable income taxes 36,918 39,346 Prepaid expenses 27,972 20,662 ----------- ----------- Total Current Assets 1,578,833 1,438,973 ----------- ----------- Land, buildings and equipment 1,013,749 944,596 Less accumulated depreciation 326,862 299,784 ----------- ----------- Net book value 686,887 644,812 ----------- ----------- Notes and accounts receivable - long-term 71,343 63,632 Investments and advances 64,311 56,767 Intangible assets - net 260,583 260,070 Deferred charges and prepaid pension cost 325,940 308,369 Deferred income taxes -0- 3,186 ----------- ----------- Total Assets $ 2,987,897 $ 2,775,809 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Current installments on long-term debt $ 32,100 $ 34,648 Bank loans 94,746 86,869 Accounts payable and accrued expenses 517,638 539,582 Estimated cost to complete long-term contracts 479,905 475,899 Advance payments by customers 101,232 74,821 Income taxes 40,402 28,457 ----------- ----------- Total Current Liabilities 1,266,023 1,240,276 Special-purpose project debt 325,311 288,066 Other long-term debt 358,602 266,338 Other long-term liabilities, deferred credits, postretirement benefits other than pensions and minority interest in subsidiary companies 332,098 333,421 Deferred income taxes 27,722 21,841 ----------- ----------- Total Liabilities 2,309,756 2,149,942 ----------- ----------- Stockholders' Equity: Common stock 40,651 40,498 Paid-in capital 197,825 192,721 Retained earnings 469,731 421,804 Accumulated translation adjustment (29,771) (28,861) ----------- ----------- 678,436 626,162 Less cost of treasury stock (295) (295) ----------- ----------- Total Stockholders' Equity 678,141 625,867 ----------- ----------- Total Liabilities and Stockholders' Equity $ 2,987,897 $ 2,775,809 =========== ===========
See notes to financial statements. - 2 - 4 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Nine Months Ended ---------------------------------- ---------------------------------- September 27, September 29, September 27, September 29, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Revenues: Operating revenues $ 960,912 $ 779,938 $ 2,775,363 $ 2,094,664 Other income 7,598 7,676 25,174 22,825 ----------- ----------- ----------- ----------- Total revenues 968,510 787,614 2,800,537 2,117,489 ----------- ----------- ----------- ----------- Cost and expenses: Cost of operating revenues 832,901 683,068 2,412,583 1,817,124 Selling, general and administrative expenses 74,784 58,750 214,495 169,659 Other deductions/minority interest 20,683 14,968 58,913 43,821 ----------- ----------- ----------- ----------- Total costs and expenses 928,368 756,786 2,685,991 2,030,604 ----------- ----------- ----------- ----------- Earnings before income taxes 40,142 30,828 114,546 86,885 Provision for income taxes 16,177 13,618 42,080 32,905 ----------- ----------- ----------- ----------- Net earnings $ 23,965 $ 17,210 $ 72,466 $ 53,980 =========== =========== =========== =========== Weighted average number of common shares outstanding 40,620,729 35,865,814 40,576,513 35,843,712 =========== =========== =========== =========== Earnings per share $ .59 $ .48 $ 1.79 $ 1.51 =========== =========== =========== =========== Cash dividends paid per common share $ .205 $ .195 $ .605 $ .575 =========== =========== =========== ===========
See notes to financial statements. - 3 - 5 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS OF DOLLARS) (UNAUDITED)
Nine Months Ended -------------------------------------- September 27, 1996 September 29, 1995 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 72,466 $ 53,980 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization 45,985 37,804 Noncurrent deferred tax 8,889 8,646 Other (4,212) (4,303) Changes in assets and liabilities, net of acquisitions: Receivables (40,870) (98,513) Contracts in process and inventories (38,630) (107,117) Accounts payable and accrued expenses (28,474) (1,685) Estimated cost to complete long-term contracts 5,957 55,802 Advance payments by customers 25,118 (7,314) Income taxes 14,512 2,662 Other assets and liabilities (15,714) (7,529) --------- --------- NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES 45,027 (67,567) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (92,261) (35,069) Proceeds from sale of properties 1,525 740 Increase in investments and advances (5,567) (18,348) (Increase)/decrease in short-term investments (23,876) 30,792 Purchase of businesses (net of cash acquired) -0- (15,503) Partnership distributions (4,859) (4,883) --------- --------- NET CASH USED BY INVESTING ACTIVITIES (125,038) (42,271) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to stockholders (24,539) (20,601) Proceeds from exercise of stock options 3,545 618 Increase in short-term debt 6,872 140,658 Proceeds from long-term debt 149,677 208,300 Repayment of long-term debt (22,467) (31,401) --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 113,088 297,574 Effect of exchange rate changes on cash and cash equivalents 67 8,526 --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 33,144 196,262 Cash and cash equivalents at beginning of year 167,131 235,801 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 200,275 $ 432,063 ========= ========= Cash paid during period: -Interest (net of amount capitalized) $ 23,155 $ 27,456 -Income taxes $ 11,710 $ 12,053
See notes to financial statements. - 4 - 6 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 1. The condensed consolidated balance sheet as of September 27, 1996, and the related condensed consolidated statements of earnings for the three and nine month periods and cash flows for the nine month periods ended September 27, 1996 and September 29, 1995 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 financial statements and notes are presented in accordance with Form 10-Q and do not contain certain information included in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 29, 1995 filed with the Securities and Exchange Commission March 19, 1996, which should be read in conjunction with this report. In conformity with generally accepted accounting principles, management must make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates. 2. In the ordinary course of business, the Corporation and its subsidiaries enter into contracts providing for assessment of damages for nonperformance or delays in completion. Suits and claims have been or may be brought against the Corporation by customers alleging deficiencies in either equipment design or plant construction. Based on its knowledge of the facts and circumstances relating to the Corporation's liabilities, if any, and to its insurance coverage, management of the Corporation believes that the disposition of such suits will not result in charges against assets or earnings materially in excess of amounts previously provided in the accounts. The Corporation and its subsidiaries, along with many other companies, are codefendants in numerous lawsuits pending in the United States, in which plaintiffs claim damages for personal injury alleged to arise from exposure to or use of asbestos. At September 27, 1996, there were approximately 91,500 claims pending. Approximately 31,000 new claims were filed in the nine month-period ended September 27, 1996 and approximately 17,300 were either settled or dismissed without payment. Any settlement costs not covered by the Corporation's insurance carriers were immaterial. The Corporation has agreements with insurance carriers covering a substantial portion of its potential costs relating to pending claims. Management of the Corporation has carefully considered the financial viability and legal obligations of its insurance carriers and has concluded that the insurance will continue to adequately fund claims and defense costs relating to asbestos litigation. The Corporation accrues as a liability any "probable" losses relating to litigation and records as an asset related "probable" insurance recoveries. Based on its knowledge of relevant facts and circumstances, on its determination of the availability and extent of insurance coverage, and on the advice of the Corporation's special counsel, the management of the Corporation is of the opinion that the ultimate disposition of pending and future asbestos-related lawsuits will not result in material charges against assets or earnings. - 5 - 7 FOSTER WHEELER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) (Continued) 3. The Corporation maintains two revolving credit facilities with a syndicate of banks. One is a short-term revolving credit facility of $100,000 with a maturity of 364 days and the second is a $300,000 revolving credit facility with a maturity of four years (collectively, the "Revolving Credit Facilities"). The Revolving Credit Facilities contain two financial covenants. The first covenant is that the Consolidated Fixed Charges Coverage Ratio (as defined in the Revolving Credit Facilities) shall be greater than 2.5:1 for each period of four consecutive fiscal quarters. The Consolidated Fixed Charges Coverage Ratio for the period ending September 27, 1996 was 2.80:1. The Revolving Credit Facilities also require the Consolidated Leverage Ratio, as defined therein, not exceed 0.5:1. As of September 27, 1996, the ratio was 0.43:1. 4. A total of 2,406,146 shares were reserved for issuance under the stock option plans; of this total 1,303,916 were not under option. 5. Foster Wheeler Corporation had a backlog of firm orders as of September 27, 1996 of $6,915,541 as compared to a backlog as of September 29, 1995 of $5,849,649. 6. Earnings per share data have been computed on the weighted average number of shares of common stock outstanding. Outstanding stock options have been disregarded because their effect on earnings per share would not be significant. 7. Interest income and cost for the following periods are:
Three Months Ended Nine Months Ended ------------------------------ ------------------------------ September 27, September 29, September 27, September 29, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Interest income $ 5,266 $ 5,781 $14,958 $17,316 ======= ======= ======= ======= Interest cost $14,335 $12,316 $44,684 $34,747 ======= ======= ======= =======
Included in interest cost is interest capitalized on self-constructed assets for the three and nine months ended September 27, 1996 of $562 and $4,297, respectively, compared to $230 and $571 for the comparable periods in 1995. - 6 - 8 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) The following is Management's Discussion and Analysis of certain significant factors that have affected the financial condition and results of operations of the Corporation for the periods indicated below. This discussion and analysis should be read in conjunction with the 1995 Annual Report on Form 10-K filed March 19, 1996. RESULTS OF OPERATIONS Nine months ended September 27,1996 compared to nine months ended September - --------------------------------------------------------------------------- 29,1995 - ------- The Corporation's consolidated backlog at September 27, 1996 totaled $6,915.5 million, the highest in the history of the Corporation. This was an increase of $1,065.9 million or 18% over the amount reported for the same period in 1995. The dollar amount of backlog is not necessarily indicative of the future earnings of the Corporation related to the performance of such work. Although backlog represents only business which is considered firm, cancellations or scope adjustments may occur. Due to factors outside the Corporation's control, such as changes in project schedules, the Corporation cannot predict with certainty the portion of backlog not to be performed. Backlog has been adjusted to reflect project cancellations, deferrals, and revised project scope and cost. The net reduction in backlog from project adjustments and cancellations for the nine months ended September 27, 1996 was $678.2 million, compared with $222.8 million for the nine months ended September 29, 1995. Furthermore, the Corporation's future award prospects include several large scale international projects and, because the large size and uncertain timing can create variability in the Corporation's contract awards, future award trends are difficult to predict with certainty. The Engineering and Construction (E & C) Group, had a backlog of $4,783.2 million at September 27, 1996, which represented a 10% increase from September 29, 1995 due primarily to the growth of orders reported by the French and the U.S. environmental subsidiaries. The Energy Equipment Group had backlog of $1,785.0 million at September 27, 1996, a 47% increase from backlog at September 29, 1995 due primarily to the acquisition of the power generation business of A. Ahlstrom Corporation (Pyropower) on September 30, 1995. New orders awarded for the nine months ended September 27, 1996 of $3,913.4 million were 32% higher than new orders awarded for the nine months ended September 29, 1995 of $2,963.1 million. Approximately 54% of new orders in the nine months ended September 27, 1996 were for projects awarded to the Corporation's subsidiaries located outside the United States. Key geographic regions contributing to new orders awarded for the nine months ended September 27, 1996 were the United States, China, Europe and the Middle East. The principal reasons for the increase in new orders awarded for the nine months ended September 27, 1996 as compared to the same period in 1995 were the significant awards made to the U.S. subsidiaries of $954.1 million and the Italian subsidiary of $721.7 million in the E & C Group, as well as orders awarded to the Energy Equipment Group in North America of $769.6 million. -7- 9 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) Operating revenues increased in the nine months ended September 27, 1996 by $680.7 million compared to the nine months ended September 29, 1995 to $2,775.4 million from $2,094.7 million. The Energy Equipment Group was primarily responsible for the increase in operating revenues, accounting for approximately 66% of this increase, or $449.5 million. Of the increase in the Energy Equipment Group's operating revenues, $383.3 million was related to the power generation business and was primarily attributable to the Pyropower acquisition. The balance of the increase is primarily related to the operations of the Italian and Spanish affiliates of the E & C Group. Gross earnings increased $85.2 million to $362.8 million from $277.6 million or 31% in the nine months ended September 27, 1996 as compared with the nine months ended September 29, 1995. The E & C Group was responsible for approximately $10.0 million of the increase in gross earnings, while the Energy Equipment Group accounted for $67.9 million of the increase in gross earnings. The increase in the Energy Equipment Group was primarily due to the acquisition of Pyropower in September, 1995. Selling, general and administrative expenses increased 26% in the nine months ended September 27, 1996 as compared with the same period in 1995, from $169.7 million to $214.5 million. The Energy Equipment Group accounted for approximately 87% of the increase in selling, general and administrative expenses, which was primarily due to the acquisition of Pyropower and Zack Power and Industrial Co. Approximately $6.4 million of the increase in selling, general, and administrative expenses was attributable to the Power Systems Group in the United States. Other income in the nine months ended September 27, 1996 as compared with September 29, 1995 increased to $25.2 million from $22.8 million. Approximately 59% of other income in the nine months ended September 27, 1996 was interest income, compared to 76% for the nine months ended September 1995. The increase in other income was primarily attributable to an increase in foreign exchange gains. Other deductions in the nine months ended September 27, 1996 increased $13.3 million, primarily due to higher interest expense and the increase in amortization of intangible assets due to the Pyropower acquisition. Net earnings increased by $18.5 million or 34% to $72.5 million for the nine months ended September 27, 1996 as compared to the same period in 1995. The Energy Equipment Group reported increased net earnings of $15.5 million primarily as a result of the Pyropower acquisition. The E & C Group also reported increased net earnings of $4.0 million, primarily due to the improved results of the Spanish subsidiary and the U.S. environmental subsidiary. Three months ended September 27, 1996 compared to three months ended September - ------------------------------------------------------------------------------ 29, 1995 - -------- New orders awarded for the three months ended September 27, 1996 of $1,257.7 million were 13% higher than new orders awarded for the three months ended September 29, 1995 of $1,113.8 million. Approximately 31% of new orders in the three months ended September 27, 1996 were for projects awarded to the Corporation's subsidiaries located outside the United States. - 8 - 10 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) The Energy Equipment Group reported an increase of $358.6 million, primarily due to its North American affiliates. This increase was partially offset by the decrease reported by the Engineering and Construction Group. Operating revenues increased in the three months ended September 27, 1996 by $181.0 million compared to the three months ended September 29, 1995 to $960.9 million from $779.9 million. The Energy Equipment Group was primarily responsible for the increase in operating revenues, accounting for 61% of this increase, or $109.6 million. Of the increase in the Energy Equipment Group's operating revenues, $99.5 million was related to the power generation business and was primarily due to the acquisition of Pyropower. The balance of the increase in primarily related to the operations of the Italian affiliate of the E & C Group. Gross earnings increased $31.1 million to $128.0 million from $96.9 million or 32% in the three months ended September 27, 1996 as compared with the three months ended September 29, 1995. The Energy Equipment Group accounted for approximately 78% of the increase. Selling, general and administrative expenses increased 27% in the three months ended September 27, 1996 as compared with the same period in 1995, from $58.8 million to $74.8 million. Approximately 75% of the increase was due to the power generation business in the Energy Equipment Group, largely as a result of the Pyropower acquisition. Net earnings increased by $6.8 million or 39% for the three months ended September 27, 1996 as compared to the same period in 1995, from $17.2 million to $24.0 million. The increase was primarily due to the increased earnings in the Energy Equipment Group's power generation business of $5.9 million or 87%, with the balance attributed to the E & C Group's Italian affiliate of $1.4 million. FINANCIAL CONDITION The Corporation's consolidated financial condition improved during the nine months ended September 27, 1996 as compared to December 29, 1995. Stockholders' equity for the nine months ended September 27, 1996 increased $52.3 million. During the nine months ended September 27, 1996, the Corporation's long-term investments in land, buildings and equipment were $92.3 million as compared with $35.1 million for the comparable period in 1995. Approximately $56 million was invested by the Power Systems Group in build, own and operate projects during the first nine months of 1996. During the next few years, capital expenditures will continue to be directed primarily toward strengthening and supporting the Corporation's core businesses. Since December 29, 1995, long-term debt, including current installments, and bank loans increased by $134.1 million, net of repayments of $22.5 million, primarily due to borrowings to fund the investments in build, own and operate projects and to fund current working capital requirements. - 9 - 11 FOSTER WHEELER CORPORATION AND SUBSIDIARIES Item 2.-Management's Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) In the ordinary course of business, the Corporation and its subsidiaries enter into contracts providing for assessment of damages for nonperformance or delays in completion. Suits and claims have been or may be brought against the Corporation by customers alleging deficiencies in either equipment design or plant construction. Based on its knowledge of the facts and circumstances relating to the Corporation's liabilities, if any, and to its insurance coverage, management of the Corporation believes that the disposition of such suits will not result in charges against assets or earnings materially in excess of amounts previously provided in the accounts. In connection with the acquisition of Pyropower, the Corporation recorded a one-time pretax reorganization provision in the fourth quarter of 1995 of $50.1 million. This provision related to the reorganization of the operations of the Energy Equipment Group that existed before the acquisition of Pyropower. In general, the reorganization is proceeding in accordance with the overall plan. Management of the Corporation does not anticipate any significant variations from the initial estimates, including the cash impact. To date, the Corporation has incurred approximately 80% of the estimated expenses, and expects to be substantially complete with the plan by the end of 1996. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $200.3 million at September 27, 1996, an increase of $33.1 million from fiscal year end 1995. In addition, short-term investments increased by $28.1 million to $141.0 million. During the first nine months of fiscal 1996, the Corporation paid $24.5 million in dividends to stockholders and repaid debt of $22.5 million. Cash flow provided by operating activities amounted to $45.0 million. New borrowings totaled $156.5 million, resulting from investments by the Power Systems Group in build, own and operate projects and requirements to fund current working capital needs. In total, the Power Systems Group invested approximately $56.0 million in the construction of waste-to-energy, cogeneration and hydrogen plants. Over the last several years working capital needs have increased as a result of the Corporation satisfying its customers' requests for more favorable payment terms under contracts. Such requests generally include reduced advance payments and more favorable payment schedules. Such terms, which require the Corporation to defer receipt of payments from its customers, have had a negative impact on the Corporation's available working capital. The management of the Corporation expects its customers' requests for more favorable payment terms under the Energy Equipment contracts to continue as a result of the competitive markets in which the Corporation operates. The Corporation intends to satisfy its continuing working capital needs by borrowing under its Revolving Credit Facilities, through internal cash generation and third-party financings in the capital markets. The Corporation's pricing of contracts recognizes costs associated with the use of working capital. The Corporation and its subsidiaries, along with many other companies, are codefendants in numerous lawsuits pending in the United States, in which plaintiffs claim damages for personal injury alleged to have arisen from the exposure or use of asbestos. -10- 12 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED) At September 27, 1996, there were approximately 91,500 claims pending. Approximately 31,000 new claims were filed in the nine-month period ended September 27, 1996 and approximately 17,300 were either settled or dismissed without payment. Any settlement costs not covered by the Corporation's insurance carriers were immaterial. The Corporation has agreements with insurance carriers covering a substantial portion of its potential costs relating to pending claims. Management of the Corporation has carefully considered the financial viability and legal obligations of its insurance carriers and has concluded that the insurers will continue to adequately fund claims and defense costs relating to asbestos litigation. Management of the Corporation believes that cash and cash equivalents of $200.3 million and short-term investments of $141.0 million at September 27, 1996, combined with cash flows from operating activities, amounts available under its Revolving Credit Facilities and access to third-party financings in the capital markets will be adequate to meet its working capital and liquidity needs for the foreseeable future. SAFE HARBOR STATEMENT Information provided by the Corporation in reports such as this report on Form 10-Q, in press releases and in statements made by employees in oral discussions, to the extent the information is not historical fact, constitutes "forward looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward looking statements by their nature involve risk and uncertainty. The Corporation cautions that a variety of factors, including but not limited to the following, could cause business conditions and results to differ from those expected by the Corporation: changes in the rate of economic growth in the United States and in other major international economies; significant changes in investment by the energy industries; changes in project schedules; significant changes in trade, global political conditions, monetary and fiscal policies worldwide; and, currency fluctuations worldwide. -11- 13 PART II. OTHER INFORMATION FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit Number Exhibit ------- ------- 3.1 Articles of Incorporation-Restated Certificate of Incorporation as amended and filed with the Secretary of State of New York on August 12, 1996, and as filed as part of this report. 12-1 Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Preferred Share Dividend Requirements 27 Financial Data Schedule (For the informational purposes of the Securities and Exchange Commission only.) b) Reports on Form 8-K ------------------- None -12- 14 PART II. OTHER INFORMATION FOSTER WHEELER CORPORATION AND SUBSIDIARIES 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 CORPORATION -------------------------- (Registrant) Date: November 11, 1996 /S/ Richard J. Swift ----------------- -------------------- Richard J. Swift (Chairman, President and Chief Executive Officer) Date: November 11, 1996 /S/ David J. Roberts ----------------- -------------------- David J. Roberts (Vice President and Chief Financial Officer) - 13 - 15 EXHIBIT INDEX Exhibit Number Exhibit - ------- ------- 3.1 Articles of Incorporation-Restated Certificate of Incorporation as amended and filed with the Secretary of State of New York on August 12, 1996, and as filed as part of this report. 12-1 Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Preferred Share Dividend Requirements 27 Financial Data Schedule (For the informational purposes of the Securities and Exchange Commission only.) EX-3.1 2 ARTICLES OF INCORPORATION 1 EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF FOSTER WHEELER CORPORATION [UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW] Pursuant to Section 807 of the Business Corporation Law, the undersigned hereby certify: 1. The name of the Corporation is Foster Wheeler Corporation. The name under which it was formed is Power Specialty Company. 2. The Certificate of Incorporation was filed by the Department of State of the State of New York on February 6, 1900. 3. The text of the Certificate of Incorporation is hereby restated without further amendment or change to read as follows: FIRST: The name of the Corporation is Foster Wheeler Corporation. SECOND: The purposes for which it is formed are as follows: To manufacture, erect, operate, repair, buy, sell, lease, let and otherwise deal in and with heat transfer, fuel burning and fuel preparation equipment of every kind and description and any equipment, machinery, controls, devices or other things auxiliary thereto or useful in connection therewith. To construct, erect, repair, operate, buy, sell, lease, let and otherwise deal in and with machinery, equipment, processes, systems, programs, mills, factories, plants and other installations or facilities for refining, producing, processing, extracting or otherwise treating or handling petroleum, chemicals, liquids, energy in any form, metals, minerals, fibers, woods, wastes, plastics, plant or animal products and all derivatives thereof. To engage in the business of civil, mechanical, chemical, electrical and other engineering, general contracting and construction. To manufacture, refine, process, treat, work, buy, sell, lease, let and generally deal in and with metals, plastics, woods, fibers, paper and chemical compounds of every description and the products or derivatives thereof. To design, manufacture, erect, operate, repair, buy, sell, lease, let and otherwise deal in and with goods, wares and merchandise of every kind and description necessary to, or of use in connection with any of the objects or purposes of the Corporation. To take or acquire real estate or other property by purchase, devise, gift, or otherwise. To purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations. 2 To acquire, and pay for in cash, stock or bonds of the Corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage, or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of the Corporation. To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock of, or any bonds, securities or evidence of indebtedness created by any other corporation or corporations organized under the laws of this State or any other state, country, nation or government, and while the owners thereof to exercise all the rights, powers and privileges of ownership. To issue bonds, debentures or obligations of the Corporation from time to time, for any of the objects or purposes of the Corporation and to sell the same on such terms as from time to time shall seem advisable, and to secure the same by mortgage, pledge, deed of trust, or otherwise. To purchase, hold, reissue, sell and transfer the shares of its own capital stock, provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital; and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly. To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount, to purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and personal property, of every class and description, in any of the states, districts, territories, or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country. To assume, to enter into, make, perform and carry out contracts of any kind with any person, firm, association, corporation, body politic or government. In general, to carry on any other business in connection with the foregoing, whether manufacturing or otherwise, and to have and exercise all the powers conferred by law, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. The foregoing clauses shall be construed both as objects and powers; and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the Corporation. THIRD: The office of the Corporation shall be located in the Borough of Manhattan, in the City and County of New York, in the State of New York. FOURTH: The aggregate number of shares which the Corporation shall have authority to issue is 161,500,000 shares, consisting of: 160,000,000 shares of a class designated "Common Stock" of the par value of $1.00 per share. 1,500,000 shares of a class designated "Preferred Stock" of no par value. The preferences, limitations and relative rights of such classes shall be as follows: 2 3 A. PREFERRED STOCK: Such Preferred Stock is issuable in series, with such designations, rights, preferences, limitations and voting rights, if any, as the Board of Directors may determine upon issuance; provided that, the Board of Directors shall fix such provisions as will, at a minimum, entitle the holders of such Preferred Stock, voting as a class, to elect at least two directors upon default of the equivalent of six quarterly dividends, such right to continue until cumulative dividends have been paid in full, or until non-cumulative dividends have been paid regularly for at least a year; and require the affirmative approval of at least two-thirds of the outstanding Preferred Stock as a prerequisite to any amendment to the Certificate of Incorporation or By-Laws altering materially any existing provision of such Preferred Stock. (1) Series A Junior Participating Preferred Stock: (a) Designation and Amount: The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting the Series A Preferred Stock shall be 400,000. (b) Dividend and Distributions: I. Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. II. The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph I immediately before it declares a dividend or distribution on the Common 3 4 Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. III.Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed or the payment thereof. (c) Voting Rights: The holders of shares of Series A Preferred Stock shall have the following voting rights: I. Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. II. Except as otherwise provided herein, in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock, or By-Law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. III. If, on the date used to determine shareholders of record for any meeting of shareholders of the Corporation at which directors are to be elected, dividends on the Series A Preferred Stock shall be in arrears in an amount equal to at least six quarterly dividends (whether or not consecutive), the number of the Board of Directors of the Corporation shall be increased by two as of the date of such meeting and the holders of Series A Preferred Stock (voting separately as a class with all other 4 5 series of Preferred Stock of the Corporation upon which like voting rights have been conferred and are exercisable) will be entitled to vote for and elect such two additional directors of the Corporation. The right of the holders of Series A Preferred Stock to vote for such two additional directors shall terminate when all accrued and unpaid dividends on the Series A Preferred Stock have been declared and paid or set apart for payment. The term of office of the directors so elected shall terminate immediately upon the termination of the right of the holders of Series A Preferred Stock (and all other series of Preferred Stock of the Corporation) to vote for such two additional directors. In connection with the right to vote for such additional directors, each holder of Series A Preferred Stock will have one vote for each share held. IV. Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. (d) Certain Restrictions: I. Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided herein are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. II. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under the preceding paragraph I purchase or otherwise acquire such shares at such time in such manner. 5 6 (e) Reacquired Shares: Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired promptly after the acquisition thereof. All such shares shall upon their retirement or cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Amendment creating a series of Preferred Stock or any similar stock or as otherwise required by law. (f) Liquidation, Dissolution or Winding Up: Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock, shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (ii) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (i) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (g) Consolidation, Merger: In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares 6 7 of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (h) No Redemption: The shares of Series A Preferred Stock shall not be redeemable. (i) Rank: The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock. (j) Amendment: Neither the Certificate of Incorporation nor the By-Laws of the Corporation shall be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class. B. COMMON STOCK: (1) Dividends: After any requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of paragraph A of Article FOURTH hereof) shall have been met, and after this Corporation shall have complied with all of the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts, then and not otherwise, the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) Liquidation, Dissolution or Winding Up: After distribution in full of any preferential amount (fixed in accordance with the provisions of paragraph A of Article FOURTH hereof) required to be distributed to the holders of the Preferred Stock in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to shareholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Voting Rights: Except as may be otherwise required by law or by the provision of this Certificate of Incorporation, each holder of Common Stock shall have one vote in respect to each share of stock held by him on all matters voted upon by the shareholders. 7 8 C. STOCK DIVIDENDS: Dividends may be paid in shares of any class to the holders of shares of the same or any other class. D. RECORD HOLDERS: The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the owner thereof for all purposes, and shall not be bound to recognize any equitable or other claim to or interest in any such share or shares on the part of any other person, whether or not it shall have express or other notice thereof. FIFTH: The Secretary of State of the State of New York is hereby designated as the agent of the Corporation upon whom process in any action or proceeding against the Corporation may be served within the State of New York. The post office address to which the Secretary of State shall mail a copy of any process in any action or proceeding against the Corporation which may be served upon him, pursuant to law, is The Corporation, c/o The Prentice-Hall Corporation System, Inc., 500 Central Avenue, Albany, New York 12206-2290. SIXTH: A. PREEMPTIVE RIGHTS: No holder of shares of the Corporation of any class, now or hereafter authorized, shall have any preferential or preemptive rights to subscribe for, purchase or receive any shares of the Corporation of any class, now or hereafter authorized, or any options or warrants for such shares, or any securities convertible into or exchangeable for such shares, which may at any time be issued, sold or offered for sale by the Corporation. B. BOARD OF DIRECTORS: (1) Number, Election and Terms: The business and affairs of the Corporation shall be managed and controlled by a Board of Directors consisting of not less than nine (9) nor more than twenty (20) persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. At the 1983 Annual Meeting of Stockholders, the directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Stockholders, the term of office of the second class to expire at the 1985 Annual Meeting of Stockholders and the term of office of the third class to expire at the 1986 Annual Meeting of Stockholders. At each Annual Meeting of Stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. No person shall serve as a director once he has attained the age of 72. 8 9 (2) Newly Created Directorships and Vacancies: Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. (3) Removal: Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the shares of the Corporation entitled to vote for the election of directors. (4) Special Meetings of Stockholders: Special meetings of stockholders of the Corporation may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors, upon not less than 30 nor more than 50 days' written notice. (5) Amendment, Repeal: Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66 2/3% of the voting power of all the shares of the Corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article SIXTH B. SEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its shareholders for damages for any breach of duty in such capacity except that the liability of a director shall not be limited (1) if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved in intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated section 719 of the New York Business Corporation Law, or (2) his acts or omissions occurred prior to the adoption of this provision. 4. This restatement of the Certificate of Incorporation herein certified was authorized by the Board of Directors of the Corporation. 9 10 IN WITNESS WHEREOF, we have subscribed this document on the date set forth below and do hereby affirm, under the penalties of perjury, that the statements contained therein have been examined by us and are true and correct. Signed on August 1, 1996. FOSTER WHEELER CORPORATION /s/ Richard J. Swift --------------------------------- Richard J. Swift Chairman, President and Chief Executive Officer /s/ Lisa Fries Gardner --------------------------------- Lisa Fries Gardner Vice President and Secretary 10 EX-12.1 3 STATEMENT OF COMPUTATION OF CONSOLIDATED RATIO 1 FOSTER WHEELER CORPORATION STATEMENT OF COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS ($000'S) UNAUDITED
Fiscal Year 9 months ----------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- --------- Earnings: - -------- Net Earnings/(Loss) $ 72,466 $ 28,534 $ 65,410 $ 57,704 $ (45,755) $ 43,268 Taxes on Income 42,080 41,129 41,457 39,114 22,321 18,017 Cumulative Effect of Change in Accounting Principle 91,259 Total Fixed Charges 53,045 60,920 45,412 43,371 46,365 41,631 Capitalized Interest (4,297) (1,634) (467) (213) (1,739) (7,824) Capitalized Interest Amortized 1,705 2,273 2,189 2,180 2,111 1,798 Equity Earnings of non-consolidated associated companies accounted for by the equity method, net of Dividends (962) (1,578) (623) (883) 771 (1,301) --------- --------- --------- --------- --------- --------- $ 164,037 $ 129,644 $ 153,378 $ 141,273 $ 115,333 $ 95,589 Fixed Charges: - ------------- Interest Expense $ 40,387 $ 49,011 $ 34,978 $ 33,558 $ 34,159 $ 24,540 Capitalized Interest 4,297 1,634 467 213 1,739 7,824 Imputed Interest on non-capitalized lease payments 8,361 10,275 9,967 9,600 10,467 9,267 --------- --------- --------- --------- --------- --------- $ 53,045 $ 60,920 $ 45,412 $ 43,371 $ 46,365 $ 41,631 RATIO OF EARNINGS TO FIXED CHARGES 3.09 2.13 3.38 3.26 2.49 2.30
*There were no preferred shares outstanding during any of the periods indicated and therefore the consolidated ratio of earnings to fixed charges and combined fixed charges and preferred share dividend requirements would have been the same as the consolidated ratio of earnings to fixed charges and combined fixed charges for each period indicated. -14- EX-27 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary of financial information extracted from the condensed consolidated balance sheet and statement of earnings for the 9 months ended September 27, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-27-1996 DEC-30-1995 SEP-27-1996 200,275 140,969 750,440 0 422,259 1,578,833 1,013,749 326,862 2,987,897 1,266,023 683,913 0 0 40,651 637,490 2,987,897 2,775,363 2,800,537 2,685,991 2,685,991 0 0 40,387 114,546 42,080 72,466 0 0 0 72,466 1.79 1.79
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