-----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, MWXaO5RyjfbuBllx203EHsOrIh1vhFxNGKr13QM/ZyldxVSCxEpSlaVLkVAiJM+a p3GB0B6WtOnJYMXL4YKhQg== 0000950123-97-004136.txt : 19970513 0000950123-97-004136.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950123-97-004136 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970328 FILED AS OF DATE: 19970512 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: 97600377 BUSINESS ADDRESS: STREET 1: PERRYVILLE CORPORATE PARK CITY: CLINTON STATE: NJ ZIP: 08809 BUSINESS PHONE: 9087304090 10-Q 1 FOSTER WHEELER CORPORATION QUARTERLY REPORT 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 MARCH 28, 1997 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 March 28, 1997 was 40,642,237 shares. 2 FOSTER WHEELER CORPORATION INDEX Page No. -------- Part I Financial Information: Item 1 - Financial Statements: Condensed Consolidated Balance Sheet at March 28, 1997 and December 27, 1996 2 Condensed Consolidated Statement of Earnings Three Months Ended March 28, 1997 and March 29, 1996 3 Condensed Consolidated Statement of Cash Flows Three Months Ended March 28, 1997 and March 29, 1996 4 Notes to Condensed Consolidated Financial Statements 5 - 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 10 Part II Other Information: Item 4 - Submission of Matters to a Vote of Security Holders 11 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) -------------------------
ASSETS March 28, 1997 December 27, - ------ (Unaudited) 1996 -------------- ------------ Current Assets: Cash and cash equivalents $ 210,862 $ 267,149 Short-term investments 161,246 137,180 Accounts and notes receivable 932,331 885,785 Contracts in process 358,761 363,716 Inventories 36,570 39,799 Prepaid and refundable income taxes 38,245 38,627 Prepaid expenses 30,853 30,192 ----------- ----------- Total Current Assets 1,768,868 1,762,448 ----------- ----------- Land, buildings and equipment 1,073,447 1,054,786 Less accumulated depreciation 335,374 330,007 ----------- ----------- Net book value 738,073 724,779 ----------- ----------- Notes and accounts receivable - long-term 76,856 74,296 Investments and advances 76,602 73,725 Intangible assets - net 328,541 331,463 Prepaid pension costs and benefits 178,082 180,473 Other, including insurance recoveries 360,102 359,362 Deferred income taxes 11,551 3,788 ----------- ----------- Total Assets $ 3,538,675 $ 3,510,334 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Current installments on long-term debt $ 32,656 $ 32,764 Bank loans 56,901 52,278 Accounts payable and accrued expenses 564,066 635,030 Estimated cost to complete long-term contracts 599,818 562,984 Advance payments by customers 93,461 116,903 Income taxes 46,541 41,935 ----------- ----------- Total Current Liabilities 1,393,443 1,441,894 Special-purpose project debt 456,851 379,284 Other long-term debt 447,302 416,995 Postretirement and other employee benefits other than pensions 176,709 180,210 Other long-term liabilities, deferred credits and minority interest in subsidiary companies 358,891 372,898 Deferred income taxes 29,201 30,095 ----------- ----------- Total Liabilities 2,862,397 2,821,376 ----------- ----------- Stockholders' Equity: Common stock 40,653 40,651 Paid-in capital 198,022 197,970 Retained earnings 483,070 471,177 Accumulated translation adjustment (45,172) (20,545) ----------- ----------- 676,573 689,253 Less cost of treasury stock (295) (295) ----------- ----------- Total Stockholders' Equity 676,278 688,958 ----------- ----------- Total Liabilities and Stockholders' Equity $ 3,538,675 $ 3,510,334 =========== ===========
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 -------------------------------- March 28, 1997 March 29, 1996 -------------- -------------- Revenues: Operating revenues $ 965,114 $ 843,916 Other income 13,365 10,507 ----------- ----------- Total revenues 978,479 854,423 ----------- ----------- Cost and expenses: Cost of operating revenues 854,515 726,642 Selling, general and administrative expenses 70,917 72,622 Other deductions/minority interest 19,686 19,452 ----------- ----------- Total costs and expenses 945,118 818,716 ----------- ----------- Earnings before income taxes 33,361 35,707 Provision for income taxes 13,140 12,271 ----------- ----------- Net earnings $ 20,221 $ 23,436 =========== =========== Weighted average number of common shares outstanding 40,641,512 40,512,674 =========== =========== Earnings per share $ .50 $ .58 =========== =========== Cash dividends paid per common share $ .205 $ .195 =========== ===========
See notes to financial statements. - 3 - 5 FOSTER WHEELER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- (IN THOUSANDS OF DOLLARS) ------------------------- (UNAUDITED) -----------
Three Months Ended ------------------------------- March 28, 1997 March 29, 1996 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 20,221 $ 23,436 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization 15,707 16,127 Noncurrent deferred tax (7,252) 4,701 Other (1,444) (1,548) Changes in assets and liabilities, net of acquisitions: Receivables (90,964) 32,260 Contracts in process and inventories (751) 3,232 Accounts payable and accrued expenses (43,103) (39,789) Estimated cost to complete long-term contracts 58,894 (42,375) Advance payments by customers (18,186) 31,875 Income taxes 5,570 5,894 Other assets and liabilities (15,203) (2,108) --------- --------- NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES (76,511) 31,705 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (33,314) (43,784) Proceeds from sale of properties 349 306 Increase in investments and advances (4,201) (430) (Increase)/decrease in short-term investments (32,479) (22,032) Partnership distributions (4,800) (4,859) --------- --------- NET CASH USED BY INVESTING ACTIVITIES (74,445) (70,799) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to stockholders (8,328) (7,893) Proceeds from exercise of stock options 53 1,705 Increase in short-term debt 7,736 7,611 Proceeds from long-term debt 110,952 98,302 Repayment of long-term debt (2,543) (19,860) --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 107,870 79,865 Effect of exchange rate changes on cash and cash equivalents (13,201) (2,233) --------- --------- (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS (56,287) 38,538 Cash and cash equivalents at beginning of year 267,149 167,131 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 210,862 $ 205,669 ========= ========= Cash paid during period: -Interest (net of amount capitalized) $ 2,580 $ 5,880 -Income taxes $ 2,268 $ 2,392
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 March 28, 1997, and the related condensed consolidated statements of earnings and cash flows for the three month periods ended March 28, 1997 and March 29, 1996 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 Foster Wheeler Corporation's Annual Report on Form 10-K for the fiscal year ended December 27, 1996 filed with the Securities and Exchange Commission March 21, 1997, 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. Plaintiffs claim damages for personal injury alleged to have arisen from the exposure to or use of asbestos in connection with work performed by the Corporation and its subsidiaries during the 1970's and prior. At March 28, 1997, there were approximately 95,700 claims pending. Approximately 6,600 new claims were filed in 1997 and approximately 3,500 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 the potential cost relating to these exposures. The Corporation has recorded, with respect to asbestos litigation, an asset relating to probable insurance recoveries and a liability relating to probable losses. These assets and liabilities were estimated based on historical data developed in conjunction with outside experts. Management of the Corporation has carefully considered the financial viability and legal obligations of its insurance carriers and has concluded that except for those insurers that have become or may become insolvent, the insurers will continue to adequately fund claims and defense costs relating to asbestos litigation. - 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 agreements with a syndicate of banks. One is a short-term revolving credit agreement of $100,000 with a maturity of 364 days and the second is a $300,000 revolving credit agreement with a maturity of four years (collectively, the "Revolving Credit Agreements"). The Revolving Credit Agreements contain two financial covenants. The first covenant is that the Consolidated Fixed Charges Coverage Ratio (as defined in the Revolving Credit Agreements) 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 March 28, 1997 was 2.81:1. The Revolving Credit Agreements also require that the Consolidated Leverage Ratio, as defined therein, not exceed 0.5:1. As of March 28, 1997, the ratio was 0.49:1. 4. A total of 2,404,346 shares were reserved for issuance under the stock option plans; of this total 933,416 were not under option. 5. Foster Wheeler Corporation had a backlog of firm orders as of March 28, 1997 of $7,139,495 as compared to a backlog as of March 29, 1996 of $6,534,120. 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 ------------------ March 28, 1997 March 29, 1996 -------------- -------------- Interest income $ 5,386 $ 5,214 ======== ======== Interest cost $ 15,364 $ 13,802 ======== ========
Included in interest cost is interest capitalized on self-constructed assets, which was $1,841 and $70 for the quarters ended March 28,1997 and March 29,1996, respectively. - 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 1996 Annual Report on Form 10-K filed March 21, 1997. RESULTS OF OPERATIONS Three months ended March 28, 1997 compared to three months ended March 29, 1996 - ------------------------------------------------------------------------------- The Corporation's consolidated backlog at March 28, 1997 totaled $7,139.5 million, the highest in the history of the Corporation. This represented an increase of $605.4 million or 9% over the amount reported as of March 29, 1996. 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 three months ended March 28, 1997 was $17.4 million, compared with $390.0 million for the three months ended March 29, 1996. 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 Group ("E & C Group"), had a backlog of $4,998.0 million at March 28, 1997, which represented a 7% increase from March 29, 1996 due primarily to orders awarded to the United Kingdom subsidiary. The Energy Equipment Group had backlog of $1,728.7 million at March 28, 1997, which represented a 9% increase from backlog at March 29, 1996 due primarily to orders awarded to the North American and Finnish subsidiaries. New orders awarded for the three months ended March 28, 1997 of $1,220.7 million were 14% lower than new orders awarded for the three months ended March 29, 1996 of $1,417.4 million. Approximately 74% of new orders in the three months ended March 28, 1997 were for projects awarded to the Corporation's subsidiaries located outside the United States. Key geographic regions contributing to new orders awarded for the three months ended March 28, 1997 were Southeast Asia, Europe, the Middle East and China. In 1996, new orders awarded to Foster Wheeler USA Corporation in the E & C Group were approximately $137 million higher than in 1997. -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 three months ended March 28, 1997 by $121.2 million compared to the three months ended March 29, 1996 to $965.1 million from $843.9 million. The E & C Group was primarily responsible for the increase in operating revenues, accounting for $147.5 million of this increase, of which $51.5 million was related to the Italian affiliate, $48.7 was due to increases in the affiliates in the United States and $16.6 million was related to the Spanish affiliate. The increase in the E & C Group's operating revenues was partially offset by a decrease in the Energy Equipment Group of approximately $26.8 million, primarily attributed to operations of the North American affiliates. Gross earnings declined $6.7 million to $110.6 million from $117.3 million or 6% in the three months ended March 28, 1997 as compared with the three months ended March 29, 1996. The Energy Equipment Group was responsible for approximately $10.8 million of the decrease in gross earnings, while the E & C Group reported an increase of $6.2 million in gross earnings. Selling, general and administrative expenses decreased 2% in the three months ended March 28, 1997 as compared with the same period in 1996, from $72.6 million to $70.9 million. Other income in the three months ended March 28, 1997 as compared with March 29, 1996 increased to $13.4 million from $10.5 million. Approximately 40% of other income in the three months ended March 28, 1997 was interest income, compared to 50% for the three months ended March 29, 1996. Other deductions in the three months ended March 28, 1997, of $18.2 million, were slightly higher than that reported in the three months ended March 29, 1996. The effective tax rate of 39% exceeds the U.S. statutory rate primarily due to state taxes and the impact of foreign earnings. Net earnings decreased by $3.2 million or 14% to $20.2 million for the three months ended March 28, 1997 as compared to the same period in 1996. The E & C Group reported increased net earnings of $2.2 million primarily due to improved results in the United Kingdom. This increase was offset by reduced earnings in the Energy Equipment Group of $3.1 million and in the Power Systems Group of $1.4 million. FINANCIAL CONDITION The Corporation's consolidated financial condition slightly declined during the three months ended March 28, 1997 as compared to December 27, 1996. Stockholders' equity for the three months ended March 28, 1997 decreased $12.7 million, primarily due to the significant fluctuation in the accumulated translation adjustment. During the three months ended March 28, 1997, the Corporation's long-term investments in land, buildings and equipment were $33.3 million as compared with $43.8 million for the comparable period in 1996. Approximately $26.1 million was invested by the Power Systems Group in build, own and operate projects during the first three months of 1997. During the next few years, capital expenditures will continue to be directed primarily toward strengthening and supporting the Corporation's core businesses. - 8 - 10 FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 2.- MANAGEMENT'S DISCUSSION AND ANALYSIS - ------- ------------------------------------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ------------------------------------------------------------ (CONTINUED) ----------- Since December 27, 1996, long-term debt, including current installments, and bank loans increased by $116.1 million, net of repayments of $2.5 million, primarily due to borrowings to fund the investments in build, own and operate projects and to fund current working capital requirements. 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. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $210.9 million at March 28, 1997, a decrease of $56.3 million from fiscal year end 1996; however, short-term investments increased by $24.1 million to $161.2 million. During the first three months of fiscal 1997, the Corporation paid $8.3 million in dividends to stockholders and repaid debt of $2.5 million. Cash used by operating activities amounted to $76.5 million. New borrowings totaled $118.7 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 $26.1 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 Agreements, 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. - 9 - 11 FOSTER WHEELER CORPORATION AND SUBSIDIARIES Item 2.- MANAGEMENT'S DISCUSSION AND ANALYSIS - ------- ------------------------------------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) ------------------------------------------------------------ (CONTINUED) ----------- The Corporation and its subsidiaries, along with many other companies, are codefendants in numerous lawsuits pending in the United States. Plaintiffs claim damages for personal injury alleged to have arisen from the exposure to or use of asbestos in connection with work performed by the Corporation and its subsidiaries during the 1970's and prior. At March 28, 1997, there were approximately 95,700 claims pending. Approximately 6,600 new claims were filed in 1997 and approximately 3,500 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 the potential cost relating to these exposures. The Corporation has recorded, with respect to asbestos litigation, an asset relating to probable insurance recoveries and a liability relating to probable losses. These assets and liabilities were estimated based on historical data developed in conjunction with outside experts. Management of the Corporation has carefully considered the financial viability and legal obligations of its insurance carriers and has concluded that except for those insurers that have become or may become insolvent, 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 $210.9 million and short-term investments of $161.2 million at March 28, 1997, combined with cash flows from operating activities, amounts available under its Revolving Credit Agreements 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. OTHER ACCOUNTING MATTERS - ------------------------ Statement of Financial Accounting Standard No. 128 "Earnings per share" was issued in February 1997. This statement establishes standards for computing and presenting earnings per share (EPS). This Statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. The Corporation is currently calculating the impact of this Statement. SAFE HARBOR STATEMENT - --------------------- This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of the Form 10-Q contain forward-looking statements that are based on Management's assumptions, expectations and projections about the various industries within which the Corporation operates. Such forward-looking statements by their nature involve a degree of 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 materially from what is contained in forward-looking statements: changes in the rate of economic growth in the United States and other major international economies, changes in investment by the energy, power and environmental industries, changes in regulatory environment, changes in project schedules, changes in trade, monetary and fiscal policies worldwide, currency fluctuations, outcomes of pending and future litigation, protection and validity of patents and other intellectual property rights and increasing competition by foreign and domestic companies. -10- 12 PART II. OTHER INFORMATION -------------------------- FOSTER WHEELER CORPORATION AND SUBSIDIARIES ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- (a) Date of Meeting --------------- The Annual Meeting of Stockholders of Foster Wheeler Corporation was held on April 28, 1997, at the Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New Jersey. (b) Election of Directors --------------------- Directors Elected For Withheld ----------------- --- -------- Martha Clark Goss 32,806,191 894,617 David J. Roberts 32,811,725 889,083 John E. Stuart 32,788,924 911,884 Charles Y.C. Tse 32,674,354 1,026,454 Other Directors continuing in office: Eugene D. Atkinson Constance J. Horner Louis E. Azzato Joseph J. Melone David J. Farris Frank E. Perkins E. James Ferland Richard J. Swift (c) Additional Matters Voted Upon ----------------------------- Approval to amend the Directors' Stock Option Plan so as to increase the aggregate number of shares of Common Stock available for issuance from 150,000 to 400,000 shares and increase the annual stock option grant for non-employee Directors from 2,000 to 3,000 shares. For 30,703,328 Against 2,602,945 Abstain 394,535 Broker Non-Votes -0- Ratification of the selection of Coopers & Lybrand, L.L.P. as auditors of the Corporation for 1997. For 33,444,100 Against 175,308 Abstain 81,400 -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 ------- ------- 12-1 Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Combined 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: May 12, 1997 /S/ Richard J. Swift ----------------------- -------------------- Richard J. Swift (Chairman, President and Chief Executive Officer) Date: May 12, 1997 /S/ David J. Roberts ------------------------ -------------------- David J. Roberts (Vice Chairman and Chief Financial Officer) - 13 - 15 EXHIBIT INDEX ------------- Exhibit Number Exhibit Description ------- ------------------- 12-1 Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Share Dividend Requirements 27 Financial Data Schedule (For the informational purposes of the Securities and Exchange Commission only.) EX-12.1 2 COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS 1 EXHIBIT 12 - 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 3 months ----------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 --------- --------- --------- --------- --------- --------- Earnings: - -------- Net Earnings/(Loss) $ 20,221 $ 82,240 $ 28,534 $ 65,410 $ 57,704 $ (45,755) Taxes on Income 13,140 44,626 41,129 41,457 39,114 22,321 Cumulative Effect of Change in Accounting Principle 91,259 Total Fixed Charges 20,256 74,002 60,920 45,412 43,371 46,365 Capitalized Interest (1,841) (6,362) (1,634) (467) (213) (1,739) Capitalized Interest Amortized 632 2,528 2,273 2,189 2,180 2,111 Equity Earnings of non-consolidated associated companies accounted for by the equity method, net of Dividends (350) (1,474) (1,578) (623) (883) 771 --------- --------- --------- --------- --------- --------- $ 52,058 $ 195,560 $ 129,644 $ 153,378 $ 141,273 $ 115,333 Fixed Charges: - ------------- Interest Expense $ 13,523 $ 54,940 $ 49,011 $ 34,978 $ 33,558 $ 34,159 Capitalized Interest 1,841 6,362 1,634 467 213 1,739 Imputed Interest on non-capitalized lease payments 4,892 12,700 10,275 9,967 9,600 10,467 --------- --------- --------- --------- --------- --------- $ 20,256 $ 74,002 $ 60,920 $ 45,412 $ 43,371 $ 46,365 RATIO OF EARNINGS TO FIXED CHARGES 2.57 2.64 2.13 3.38 3.26 2.49
*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 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary of financial information extracted from the condensed consolidated balance sheet and statement of earnings for the 3 months ended March 28, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-26-1997 DEC-28-1996 MAR-28-1997 210,862 161,246 932,331 0 395,331 1,768,868 1,073,447 335,374 3,538,675 1,393,443 904,153 0 0 40,653 635,625 3,538,675 965,114 978,479 925,432 925,432 0 0 13,523 33,361 13,140 20,221 0 0 0 20,221 0.50 0.50
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