<PAGE> 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.
<PAGE> 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 -
<PAGE> 3
PART I. FINANCIAL INFORMATION
FOSTER WHEELER CORPORATION AND SUBSIDIARIES
ITEM 1. - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
September 27, 1996 December 29,
ASSETS (Unaudited) 1995
- ------ ----------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 4
FOSTER WHEELER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- ----------------------------------
September 27, September 29, September 27, September 29,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
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
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
- 3 -
<PAGE> 5
FOSTER WHEELER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------------
September 27, 1996 September 29, 1995
------------------ ------------------
<S> <C> <C>
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
</TABLE>
See notes to financial statements.
- 4 -
<PAGE> 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 -
<PAGE> 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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 27, September 29, September 27, September 29,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 5,266 $ 5,781 $14,958 $17,316
======= ======= ======= =======
Interest cost $14,335 $12,316 $44,684 $34,747
======= ======= ======= =======
</TABLE>
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 -
<PAGE> 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-
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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 -
<PAGE> 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.)
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<TABLE>
<CAPTION>
Fiscal Year
9 months -----------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
*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-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1996
<PERIOD-START> DEC-30-1995
<PERIOD-END> SEP-27-1996
<CASH> 200,275
<SECURITIES> 140,969
<RECEIVABLES> 750,440
<ALLOWANCES> 0
<INVENTORY> 422,259
<CURRENT-ASSETS> 1,578,833
<PP&E> 1,013,749
<DEPRECIATION> 326,862
<TOTAL-ASSETS> 2,987,897
<CURRENT-LIABILITIES> 1,266,023
<BONDS> 683,913
0
0
<COMMON> 40,651
<OTHER-SE> 637,490
<TOTAL-LIABILITY-AND-EQUITY> 2,987,897
<SALES> 2,775,363
<TOTAL-REVENUES> 2,800,537
<CGS> 2,685,991
<TOTAL-COSTS> 2,685,991
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,387
<INCOME-PRETAX> 114,546
<INCOME-TAX> 42,080
<INCOME-CONTINUING> 72,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,466
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 1.79
</TABLE>
