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Foster Wheeler 10-Q 2008
10-Q
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2008
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-31305
FOSTER WHEELER LTD.
(Exact name of registrant as specified in its charter)
     
Bermuda   22-3802649
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
Perryville Corporate Park    
Clinton, New Jersey   08809-4000
(Address of principal executive offices)   (Zip Code)
(908) 730-4000
(Registrant’s telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 133,753,790 common shares ($0.01 par value) were outstanding as of October 24, 2008.
 
 

 


 

FOSTER WHEELER LTD.
INDEX
 
  3  
 
   
  3  
 
   
  3  
 
   
  4  
 
   
  5  
 
   
  6  
 
   
  7  
 
   
  8  
 
   
  36  
 
   
  64  
 
   
  64  
 
   
  65  
 
   
  65  
 
   
  65  
 
   
  65  
 
   
  65  
 
   
  65  
 
   
  65  
 
   
  66  
 
   
  67  
 EX-10.2: EMPLOYMENT AGREEMENT
 EX-10.3: AGREEMENT FOR THE TERMINATION OF FIXED TERM EMPLOYMENT CONTRACT
 EX-10.4: FIXED TERM EMPLOYMENT AGREEMENT
 EX-10.5: FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
 EX-23.1: CONSENT OF ANALYSIS, RESEARCH & PLANNING CORPORATION
 EX-23.2: CONSENT OF PETERSON RISK CONSULTING
 EX-31.1: CERTIFICATION
 EX-31.2: CERTIFICATION
 EX-32.1: CERTIFICATION
 EX-32.2: CERTIFICATION

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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands of dollars, except per share amounts)
(unaudited)
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Operating revenues
  $ 1,718,355     $ 1,299,872     $ 5,215,101     $ 3,641,760  
Cost of operating revenues
    (1,489,095 )     (1,101,912 )     (4,522,654 )     (3,067,442 )
 
                       
Contract profit
    229,260       197,960       692,447       574,318  
 
                               
Selling, general and administrative expenses
    (74,831 )     (62,686 )     (218,771 )     (180,079 )
Other income, net
    (1,178 )     22,319       36,995       43,730  
Other deductions, net
    (8,986 )     (7,672 )     (27,080 )     (33,075 )
Interest income
    12,457       12,467       35,155       24,263  
Interest expense
    (5,193 )     (4,716 )     (16,204 )     (14,652 )
Minority interest in income of consolidated affiliates
    (834 )     (1,765 )     (1,859 )     (5,038 )
Net asbestos-related gain/(provision)
    (1,725 )     8,633       30,738       8,633  
 
                       
Income before income taxes
    148,970       164,540       531,421       418,100  
Provision for income taxes
    (21,050 )     (35,439 )     (104,683 )     (102,324 )
 
                       
Net income
  $ 127,920     $ 129,101     $ 426,738     $ 315,776  
 
                       
 
                               
Earnings per common share (see Note 1):
                               
Basic
  $ 0.89     $ 0.91     $ 2.96     $ 2.24  
 
                       
Diluted
  $ 0.88     $ 0.89     $ 2.94     $ 2.18  
 
                       
See notes to condensed consolidated financial statements.

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FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands of dollars, except share data and per share amounts)
(unaudited)
                 
    September 26,     December 28,  
    2008     2007  
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 1,308,924     $ 1,048,544  
Accounts and notes receivable, net:
               
Trade
    634,975       580,883  
Other
    121,518       98,708  
Contracts in process
    291,466       239,737  
Prepaid, deferred and refundable income taxes
    39,955       36,532  
Other current assets
    30,102       39,979  
 
           
Total current assets
    2,426,940       2,044,383  
 
           
Land, buildings and equipment, net
    364,377       337,485  
Restricted cash
    26,430       20,937  
Notes and accounts receivable — long-term
    2,103       2,941  
Investments in and advances to unconsolidated affiliates
    210,168       198,346  
Goodwill, net
    65,060       53,345  
Other intangible assets, net
    61,705       61,190  
Asbestos-related insurance recovery receivable
    287,695       324,588  
Other assets
    90,934       93,737  
Deferred income taxes
    102,154       112,036  
 
           
TOTAL ASSETS
  $ 3,637,566     $ 3,248,988  
 
           
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY
               
Current Liabilities:
               
Current installments on long-term debt
  $ 19,490     $ 19,368  
Accounts payable
    360,675       372,531  
Accrued expenses
    319,329       331,814  
Billings in excess of costs and estimated earnings on uncompleted contracts
    835,236       744,236  
Income taxes payable
    69,919       55,824  
 
           
Total current liabilities
    1,604,649       1,523,773  
 
           
Long-term debt
    203,582       185,978  
Deferred income taxes
    81,139       81,008  
Pension, postretirement and other employee benefits
    254,308       290,741  
Asbestos-related liability
    334,142       376,803  
Other long-term liabilities and minority interest
    203,843       216,916  
Commitments and contingencies
               
 
           
TOTAL LIABILITIES
    2,681,663       2,675,219  
 
           
Temporary Equity:
               
Non-vested restricted awards subject to redemption
    4,892       2,728  
 
           
TOTAL TEMPORARY EQUITY
    4,892       2,728  
 
           
Shareholders’ Equity:
               
Preferred shares:
               
$0.01 par value; authorized: September 26, 2008 - 901,150 shares and December 28, 2007 - 901,943 shares; issued and outstanding: September 26, 2008 - 1,094 shares and December 28, 2007 - 1,887 shares
           
Common shares:
               
$0.01 par value; authorized: September 26, 2008 - 296,007,803 shares and December 28, 2007 - 296,007,011 shares; issued and outstanding: September 26, 2008 - 142,971,885 shares and December 28, 2007 - 143,877,804 shares
    1,430       1,439  
Paid-in capital
    1,346,884       1,385,311  
Accumulated deficit
    (127,857 )     (554,595 )
Accumulated other comprehensive loss
    (269,446 )     (261,114 )
 
           
TOTAL SHAREHOLDERS’ EQUITY
    951,011       571,041  
 
           
TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY
  $ 3,637,566     $ 3,248,988  
 
           
See notes to condensed consolidated financial statements.

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FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS’ EQUITY
(in thousands of dollars, except share data)
(unaudited)
                                 
    Fiscal Nine Months Ended  
    September 26, 2008     September 28, 2007  
    Shares     Amount     Shares     Amount  
Preferred Shares:
                               
Balance at beginning of period
    1,887     $       3,658     $  
Preferred shares converted into common shares
    (793 )           (290 )      
 
                       
Balance at end of period
    1,094     $       3,368     $  
 
                       
 
Common Shares:
                               
Balance at beginning of period
    143,877,804     $ 1,439       138,182,948     $ 1,382  
Retirement of common shares purchased under common share repurchase program
    (1,285,548 )     (13 )            
Issuance of common shares upon exercise of common share purchase warrants
    85,057       1       1,799,988       18  
Issuance of common shares upon exercise of stock options
    128,996       1       2,905,998       29  
Issuance of common shares upon vesting of restricted awards
    62,486       1       684,796       7  
Issuance of common shares upon conversion of preferred shares
    103,090       1       37,690        
 
                       
Balance at end of period
    142,971,885     $ 1,430       143,611,420     $ 1,436  
 
                       
 
Paid-in Capital:
                               
Balance at beginning of period
          $ 1,385,311             $ 1,348,800  
Retirement of common shares purchased under common share repurchase program
            (50,014 )              
Issuance of common shares upon exercise of common share purchase warrants
            398               8,422  
Issuance of common shares upon exercise of stock options
            2,594               16,211  
Share-based compensation expense-stock options and restricted awards
            8,436               4,356  
Excess tax benefit related to equity-based incentive program
            161               4,130  
Issuance of common shares upon vesting of restricted awards
            (1 )             (7 )
Issuance of common shares upon conversion of preferred shares
            (1 )              
 
                           
Balance at end of period
          $ 1,346,884             $ 1,381,912  
 
                           
 
Accumulated Deficit:
                               
Balance at beginning of period
          $ (554,595 )           $ (944,113 )
Cumulative effect of adoption of FIN 48
                          (4,356 )
 
                           
Balance at beginning of period, as adjusted
            (554,595 )             (948,469 )
Net income for the period
            426,738               315,776  
 
                           
Balance at end of period
          $ (127,857 )           $ (632,693 )
 
                           
 
Accumulated Other Comprehensive Loss:
                               
Balance at beginning of period
          $ (261,114 )           $ (343,342 )
Foreign currency translation adjustments
            (19,490 )             19,495  
Net gain/(loss) on derivative instruments designated as cash flow hedges, net of tax
            (6 )             1,279  
Pension and other postretirement benefits, net of tax
            11,164               11,882  
 
                           
Balance at end of period
          $ (269,446 )           $ (310,686 )
 
                           
 
Total Shareholders’ Equity
          $ 951,011             $ 439,969  
 
                           
See notes to condensed consolidated financial statements.

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FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands of dollars)
(unaudited)
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Net income
  $ 127,920     $ 129,101     $ 426,738     $ 315,776  
Foreign currency translation adjustments
    (39,749 )     10,113       (19,490 )     19,495  
Net gain/(loss) on derivative instruments designated as cash flow hedges, net of tax
    (3,268 )     (587 )     (6 )     1,279  
Pension and other postretirement benefits, net of tax
    3,625       3,984       11,164       11,882  
 
                       
Comprehensive income
  $ 88,528     $ 142,611     $ 418,406     $ 348,432  
 
                       
See notes to condensed consolidated financial statements.

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FOSTER WHEELER LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)
(unaudited)
                 
    Fiscal Nine Months Ended  
    September 26,     September 28,  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES
               
Net income
  $ 426,738     $ 315,776  
Adjustments to reconcile net income to cash flows from operating activities:
               
Depreciation and amortization
    33,366       27,120  
Net asbestos-related provision/(gain)
    5,175       (8,633 )
Share-based compensation expense-stock options and restricted awards
    10,600       5,100  
Excess tax benefit related to equity-based incentive program
    (161 )     (3,888 )
Deferred tax
    5,499       15,146  
Loss/(gain) on sale of assets
    831       (6,887 )
Equity in the net earnings of partially-owned affiliates, net of dividends
    (4,985 )     (23,150 )
Other noncash items
    1,875       8,152  
Changes in assets and liabilities:
               
Increase in receivables
    (96,337 )     (81,496 )
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts
    40,047       (27,663 )
(Decrease)/increase in accounts payable and accrued expenses
    (10,556 )     79,347  
Increase in income taxes payable
    13,514       14,462  
Net change in other assets and liabilities
    (17,814 )     (71,735 )
 
           
Net cash provided by operating activities
    407,792       241,651  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
               
Acquisition of businesses, net of cash acquired
    (14,856 )     (6,319 )
Change in restricted cash
    (6,143 )     (2,848 )
Capital expenditures
    (62,415 )     (33,504 )
Proceeds from sale of assets
    718       6,732  
Investments in and advances to unconsolidated affiliates
    (4,429 )     (1,242 )
Return of investment from unconsolidated affiliates
    2,330       6,324  
 
           
Net cash used in investing activities
    (84,795 )     (30,857 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
               
Repurchase and retirement of common shares
    (50,027 )      
Distributions to minority third-party ownership interests
    (9,625 )     (5,179 )
Proceeds from common share purchase warrant exercises
    399       8,440  
Proceeds from stock option exercises
    2,595       16,240  
Excess tax benefit related to equity-based incentive program
    161       3,888  
Proceeds from issuance of short-term debt
    3,658        
Proceeds from issuance of long-term debt
    25,030       330  
Repayment of long-term debt and capital lease obligations
    (9,387 )     (6,225 )
 
           
Net cash (used in)/provided by financing activities
    (37,196 )     17,494  
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    (25,421 )     21,222  
 
           
 
               
Increase in cash and cash equivalents
    260,380       249,510  
Cash and cash equivalents at beginning of year
    1,048,544       610,887  
 
           
Cash and cash equivalents at end of period
  $ 1,308,924     $ 860,397  
 
           
See notes to condensed consolidated financial statements.

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FOSTER WHEELER LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands of dollars, except share data and per share amounts)
(unaudited)
1. Summary of Significant Accounting Policies
     Basis of Presentation — The accompanying condensed consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments only consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year.
     The financial statements and notes are presented in accordance with the requirements of Form 10-Q and do not contain certain information included in our annual report on Form 10-K for the fiscal year ended December 28, 2007 (“2007 Form 10-K”), filed with the Securities and Exchange Commission on February 26, 2008. The condensed consolidated balance sheet as of December 28, 2007 was derived from the audited financial statements included in our 2007 Form 10-K, but does not include all the disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements. A summary of our significant accounting policies is presented below.
     Principles of Consolidation — The condensed consolidated financial statements include the accounts of Foster Wheeler Ltd. and all significant domestic and foreign subsidiaries as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated.
     Our fiscal year is the 52- or 53-week annual accounting period ending the last Friday in December for domestic operations and December 31 for foreign operations. There were 13 weeks in the third quarter in both fiscal years 2008 and 2007.
     Capital Alterations — On January 8, 2008, our shareholders approved an increase in our authorized share capital at a special general meeting of common shareholders. The increase in authorized share capital was necessary in order to effect a two-for-one stock split of our common shares which was approved by our Board of Directors on November 6, 2007. The stock split was effected on January 22, 2008 in the form of a stock dividend to common shareholders of record at the close of business on January 8, 2008 in the ratio of one additional Foster Wheeler Ltd. common share in respect of each common share outstanding. As a result, all references to share capital, the number of shares, stock options, restricted awards, per share amounts, cash dividends, and any other reference to shares in the condensed consolidated financial statements, unless otherwise noted, have been adjusted to reflect the stock split on a retroactive basis.
     Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. Significant estimates are used when accounting for long-term contracts including estimates of total costs and customer and vendor claims, employee benefit plan obligations, share-based compensation plans, uncertain tax positions and deferred taxes, and asbestos liabilities and expected recoveries, among others.
     Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term fixed-price contracts are recorded under the percentage-of-completion method. Progress towards completion is measured using physical completion of individual tasks for all contracts with a value of $5,000 or greater. Progress toward completion of fixed-priced contracts with a value less than $5,000 is measured using the cost-to-cost method.
     Revenues and profits on cost-reimbursable contracts are recorded as the services are rendered based on the estimated revenue per man-hour, including any incentives assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as revenue on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs.
     Contracts in process are stated at cost, increased for profits recorded on the completed effort or decreased for estimated losses, less billings to the customer and progress payments on uncompleted contracts.

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     We have numerous contracts that are in various stages of completion. Such contracts require estimates to determine the extent of revenue and profit recognition. These estimates may be revised from time to time as additional information becomes available. In accordance with the accounting and disclosure requirements of the American Institute of Certified Public Accountants Statement of Position (“SOP”) 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts” and Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3,” we review all of our material contracts monthly and revise our estimates as appropriate. These estimate revisions, which include both increases and decreases in estimated profit, result from events such as earning project incentive bonuses or the incurrence or forecasted incurrence of contractual liquidated damages for performance or schedule issues, providing services and purchasing third-party materials and equipment at costs differing from those previously estimated and testing of completed facilities which, in turn, eliminates or confirms completion and warranty-related costs. Project incentives are recognized when it is probable they will be earned. Project incentives are frequently tied to cost, schedule and/or safety targets and, therefore, tend to be earned late in a project’s life cycle. There were 26 and 38 separate projects that had final estimated contract profit revisions whose impact on contract profit exceeded $1,000 during the first fiscal nine months of 2008 and 2007, respectively. The changes in final estimated contract profits resulted in net increases to contract profit of $9,120 and $26,070 during the fiscal quarter and nine months ended September 26, 2008, respectively. The changes in final estimated contract profits resulted in a net increase to contract profit of $17,980 and $34,120 during the fiscal quarter and nine months ended September 28, 2007, respectively. The impact on contract profit is measured as of the beginning of the quarterly and year-to-date periods and represents the incremental contract profit or loss that would have been recorded in prior periods had we been able to recognize in those periods the impact of the current period changes in final estimated profits. Please see Note 11 for further information related to changes in final estimated profits.
     Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, disputed or unapproved change orders as to both scope and price or other causes of unanticipated additional costs. We record claims in accordance with paragraph 65 of SOP 81-1, which states that recognition of amounts as additional contract revenue related to claims is appropriate only if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. Under SOP 81-1, those two requirements are satisfied by the existence of all of the following conditions: the contract or other evidence provides a legal basis for the claim; additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in our performance; costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and the evidence supporting the claim is objective and verifiable. If such requirements are met, revenue from a claim may be recorded only to the extent that contract costs relating to the claim have been incurred. Costs attributable to claims are treated as costs of contract performance as incurred and are recorded in contracts in process. As of September 26, 2008, our condensed consolidated financial statements assumed recovery of commercial claims of $27,400, of which $800 has yet to be expended. As of December 28, 2007, our condensed consolidated financial statements assumed recovery of commercial claims of $22,200, of which $3,700 was yet to be expended.
     In certain circumstances, we may defer pre-contract costs when it is probable that these costs will be recovered under a future contract. Such deferred costs would then be included in contract costs upon execution of the anticipated contract. We had no material deferred pre-contract costs as of September 26, 2008 or December 28, 2007.
     Certain special-purpose subsidiaries in our global power business group are reimbursed by customers for their costs, including amounts related to principal repayments of non-recourse project debt, for building and operating certain facilities over the lives of the corresponding service contracts.
     Cash and Cash Equivalents — Cash and cash equivalents include highly liquid short-term investments with original maturities of three months or less. Cash and cash equivalents of $1,003,382 and $800,036 were maintained by our foreign subsidiaries as of September 26, 2008 and December 28, 2007, respectively. These subsidiaries require a portion of these funds to support their liquidity and working capital needs, as well as to comply with required minimum capitalization and contractual restrictions. Accordingly, a portion of these funds may not be readily available for repatriation to U.S. entities.

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     Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. In accordance with terms under our long-term contracts, our customers may withhold certain percentages of such billings until completion and acceptance of the work performed. Final payments of all such amounts withheld might not be received within a one-year period. In conformity with industry practice, however, the full amount of accounts receivable, including such amounts withheld, are included in current assets on the condensed consolidated balance sheet.
     Trade accounts receivable are continually evaluated for collectibility. Provisions are established on a project-specific basis when there is an issue associated with the client’s ability to make payments or there are circumstances where the client is not making payment due to contractual issues.
     Contracts in Process and Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts — Under long-term contracts, amounts recorded in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts may not be realized or paid, respectively, within a one-year period. In conformity with industry practice, however, the full amount of contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts is included in current assets and current liabilities on the condensed consolidated balance sheet, respectively.
     Land, Buildings and Equipment — Depreciation is computed on a straight-line basis using estimated lives ranging from 10 to 50 years for buildings and from 3 to 35 years for equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses, if any, are reflected in earnings.
     Investments in and Advances to Unconsolidated Affiliates — We use the equity method of accounting for affiliates in which our investment ownership ranges from 20% to 50% unless significant economic or governance considerations indicate that we are unable to exert significant influence in which case the cost method is used. The equity method is also used for affiliates in which our investment ownership is greater than 50% but we do not have a controlling interest. Currently, all of our investments in affiliates in which our investment ownership is 20% or greater and that are not consolidated are recorded using the equity method. Affiliates in which our investment ownership is less than 20% are carried at cost.
     Intangible Assets — Intangible assets consist principally of goodwill, trademarks and patents. Goodwill is allocated to our reporting units on a relative fair value basis at the time of the original purchase price allocation. Patents and trademarks are amortized on a straight-line basis over periods of 3 to 40 years. Customer relationships and backlog are amortized on a straight-line basis over periods of 1 to 15 years.
     We test goodwill for impairment at the reporting unit level as defined in SFAS No. 142, “Goodwill and Other Intangible Assets.” This test is a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value, which is estimated based on discounted future cash flows, exceeds the carrying amount, goodwill is not considered impaired. If the carrying amount exceeds the fair value, the second step must be performed to measure the amount of the impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. In the fourth quarter of each fiscal year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in earnings. An impairment loss would be recognized in an amount equal to the excess of the carrying amount of the goodwill over the implied fair value of the goodwill. SFAS No. 142 also requires that intangible assets with determinable useful lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
     In July 2008, we acquired the majority of the assets and work force of an engineering design company that has an engineering center in Kolkata, India. In conjunction with the acquisition, we recorded $6,610 of goodwill and $330 of identifiable intangible assets. Please see Note 2 for further information related to this acquisition.
     In February 2008, we acquired a biopharmaceutical engineering company that is based in Philadelphia, Pennsylvania. In conjunction with the acquisition, we recorded $5,523 of goodwill and $3,600 of identifiable intangible assets. Please see Note 2 for further information related to this acquisition.

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     We had total net goodwill of $65,060 and $53,345 as of September 26, 2008 and December 28, 2007, respectively. Of the $65,060 of goodwill as of September 26, 2008, $53,016 is related to our global power business group and $12,044 is related to our global engineering and construction group. In fiscal year 2007, the fair value of all reporting units exceeded the carrying amounts except for a domestic reporting unit, where a goodwill impairment charge of $2,401 was recorded related to winding down of certain operations.
     We had total unamortized identifiable intangible assets of $61,705 and $61,190 as of September 26, 2008 and December 28, 2007, respectively. Of the $61,705 of identifiable intangible assets as of September 26, 2008, $58,213 is related to our global power business group and $3,492 is related to our global engineering and construction business group. The following table details amounts relating to our identifiable intangible assets:
                                                 
    September 26, 2008     December 28, 2007  
    Gross             Net     Gross             Net  
    Carrying     Accumulated     Carrying     Carrying     Accumulated     Carrying  
    Amount     Amortization     Amount     Amount     Amortization     Amount  
Patents
  $ 39,390     $ (22,538 )   $ 16,852     $ 39,375     $ (21,026 )   $ 18,349  
Trademarks
    63,668       (22,065 )     41,603       63,344       (20,503 )     42,841  
Customer relationships and backlog
    3,630       (380 )     3,250                    
 
                                   
Total
  $ 106,688     $ (44,983 )   $ 61,705     $ 102,719     $ (41,529 )   $ 61,190  
 
                                   
     Amortization expense related to identifiable intangible assets, which is recorded within cost of operating revenues on the condensed consolidated statement of operations, totaled $1,157 and $3,454 for the fiscal quarter and nine months ended September 26, 2008, respectively. Amortization expense totaled $912 and $2,720 for the fiscal quarter and nine months ended September 28, 2007, respectively. Amortization expense is expected to approximate $4,600 each year in the next five years.
     Income Taxes — Deferred tax assets/liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
     We do not make a provision for U.S. federal income taxes on foreign subsidiary earnings if we expect such earnings to be permanently reinvested outside the United States.
     We recognize interest accrued on the unrecognized tax benefits in interest expense and penalties on the unrecognized tax benefits in other deductions, net on our consolidated statement of operations.
     Foreign Currency — The functional currency of our foreign operations is the local currency of their country of domicile. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at period-end exchange rates with the resulting translation adjustment recorded as a separate component within accumulated other comprehensive loss. Income and expense accounts and cash flows are translated at weighted-average exchange rates for the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income, net and other deductions, net, based on the net transaction gain or loss during each of the fiscal nine months ended September 26, 2008 and September 28, 2007.
     We maintain a foreign currency risk-management strategy that uses foreign currency forward contracts to protect us from unanticipated fluctuations in cash flows that may arise from volatility in currency exchange rates between the functional currencies of our subsidiaries and the foreign currencies in which some of our operating purchases and sales are denominated. We utilize these contracts solely to hedge specific foreign currency exposures, whether or not they qualify for hedge accounting under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” During the fiscal quarters and nine months ended September 26, 2008 and September 28, 2007, none of the contracts met the requirements for hedge accounting under SFAS No. 133. Accordingly, we recorded pretax foreign exchange losses of $(2,313) and $(1,326) for the fiscal quarter and nine months ended September 26, 2008, respectively. Similarly, we recorded a pretax foreign exchange gain/(loss) of $(90) and $576 for the fiscal quarter and nine months ended September 28, 2007, respectively. These amounts were recorded in the following line items on the condensed consolidated statement of operations for the periods indicated:

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    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Cost of operating revenues
  $ (2,550 )   $ (54 )   $ (1,239 )   $ 674  
Other income/(deductions)
    237       (36 )     (87 )     (98 )
 
                       
Pretax gain/(loss)
  $ (2,313 )   $ (90 )   $ (1,326 )   $ 576  
 
                       
     The mark-to-market adjustments on foreign exchange contracts for these unrealized gains or losses are recorded in either contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts on the condensed consolidated balance sheet.
     During the fiscal nine months ended September 26, 2008 and September 28, 2007, we included net cash inflows on the settlement of derivatives of $6,353 and $4,280, respectively, within the “net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts,” a component of cash flows from operating activities in the condensed consolidated statement of cash flows.
     Interest Rate Risk — We use interest rate swap contracts to manage interest rate risk associated with some of our variable rate special-purpose limited recourse project debt. Certain of our affiliates in which we have an equity interest also use interest rate swap contracts to manage interest rate risk associated with their limited recourse project debt. Upon entering into the swap contracts, we designate the interest rate swaps as cash flow hedges in accordance with SFAS No. 133. We assess at inception, and on an ongoing basis, whether the interest rate swaps are highly effective in offsetting changes in the cash flows of the project debt. Consequently, we record the fair value of our interest rate swap contracts in our condensed consolidated balance sheet at each balance sheet date. Changes in the fair value of the interest rate swap contracts are recorded as a component of comprehensive income on our condensed consolidated statement of comprehensive income. As of September 26, 2008 and December 28, 2007, we had net gains on the swap contracts of $1,667 and $1,673, respectively, which were recorded net of tax provisions of $632 and $635, respectively, and were included in accumulated other comprehensive loss on the condensed consolidated balance sheet.
     Retirement of Common Shares under Common Share Repurchase Program — On September 12, 2008, we announced a share repurchase program pursuant to which our Board of Directors authorized the repurchase of up to $750,000 of our outstanding common shares. Any repurchases will be made at our discretion in the open market or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements and will depend on a variety of factors, including market conditions, share price and other factors. The program does not obligate us to acquire any particular number of common shares. The program has no expiration date and may be suspended or discontinued at any time. Any repurchases made pursuant to the share repurchase program will be funded using our cash on hand.
     All common shares acquired under our common share repurchase program are immediately retired upon purchase. The common share value, on the condensed consolidated balance sheet, is reduced for the par value of the retired common shares. Paid-in capital, on the condensed consolidated balance sheet, is reduced for the excess of fair value and related fees paid above par value for the common shares acquired.
     Common shares retired under the common share repurchase program reduce the weighted-average number of common shares outstanding during the reporting period when calculating earnings per common share, as described below.
     Earnings per Common Share — Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period, excluding non-vested restricted shares of 82,980 and 165,960 as of September 26, 2008 and September 28, 2007, respectively. Restricted shares and restricted share units (collectively, “restricted awards”) are included in the weighted-average number of common shares outstanding when such restricted awards vest.
     Diluted earnings per common share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options, warrants to purchase common shares and the non-vested portion of restricted awards to the extent such securities are dilutive.

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     In profitable periods, outstanding stock options and warrants have a dilutive effect under the treasury stock method when the average common share price for the period exceeds the assumed proceeds from the exercise of the warrant or option. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the condensed consolidated statement of operations, and any tax benefits that would be recorded in paid-in capital when the option or warrant is exercised. Under the treasury stock method, the assumed proceeds are assumed to be used to repurchase common shares in the current period. The dilutive impact of the non-vested portion of restricted awards is determined using the treasury stock method, but the proceeds include only the unrecognized compensation cost and tax benefits as assumed proceeds.
     The computations of basic and diluted earnings per common share were as follows:
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Basic earnings per common share:
                               
Net income
  $ 127,920     $ 129,101     $ 426,738     $ 315,776  
 
                               
Weighted-average number of common shares outstanding for basic earnings per common share
    144,030,570       142,517,528       143,980,815       141,034,618  
 
                       
Basic earnings per common share
  $ 0.89     $ 0.91     $ 2.96     $ 2.24  
 
                       
 
                               
Diluted earnings per common share:
                               
Net income
  $ 127,920     $ 129,101     $ 426,738     $ 315,776  
 
                               
Weighted-average number of common shares outstanding for basic earnings per common share
    144,030,570       142,517,528       143,980,815       141,034,618  
Effect of dilutive securities:
                               
Options to purchase common shares
    451,516       672,578       560,480       1,153,288  
Warrants to purchase common shares
    558,564       1,640,534       589,065       2,134,916  
Non-vested portion of restricted awards
    158,946       261,824       219,571       243,272  
 
                       
Weighted-average number of common shares outstanding for diluted earnings per common share
    145,199,596       145,092,464       145,349,931       144,566,094  
 
                       
 
Diluted earnings per common share
  $ 0.88     $ 0.89     $ 2.94     $ 2.18  
 
                       
     The following table summarizes the common share equivalent of potentially dilutive securities that have been excluded from the denominator used in the calculation of diluted earnings per common share due to their antidilutive effect:
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Common shares issuable under outstanding options not included in the computation of diluted earnings per common share because the assumed proceeds were greater than the average common share price for the period
    526,600       165,736       478,221       357,756  
 
                       

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     Share-Based Compensation Plans — Our share-based compensation plans are accounted for in accordance with the provisions of SFAS No. 123R, “Share-Based Payment.” We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model. We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:
    Expected volatility — we estimate the volatility of our common share price at the date of grant using historical volatility adjusted for periods of unusual stock price activity.
 
    Expected term — we estimate the expected term of options granted to our chief executive officer based on a combination of vesting schedules, contractual life of the option, past history and estimates of future exercise behavior patterns as outlined in SFAS No. 123R. For grants to other employees and the remaining directors, we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.”
 
    Risk-free interest rate — we estimate the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.
 
    Dividends — we use an expected dividend yield of zero because we have not declared or paid a cash dividend since July 2001 and we do not have any plans to declare or pay any cash dividends.
     We used the following weighted-average assumptions to estimate the fair value of the options granted for the periods indicated:
         
    Fiscal Nine Months Ended
    September 26,   September 28,
    2008   2007
Expected volatility
  45.99%   42.59%
Expected term
  3.6 years   3.2 years
Risk-free interest rate
  2.16%   4.47%
Expected dividend yield
  0%   0%
     We estimate the fair value of restricted awards using the market price of our common shares on the date of grant. We then recognize the fair value of each restricted award as compensation cost ratably using the straight-line attribution method over the service period (generally the vesting period).
     We estimate pre-vesting forfeitures at the time of grant using a combination of historical data and demographic characteristics, and we revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We record share-based compensation expense only for those awards that are expected to vest.
     Recent Accounting Developments — In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The standard is effective for financial assets and liabilities, as well as for any other assets and liabilities that are required to be measured at fair value on a recurring basis, in financial statements for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued a partial one-year deferral of SFAS No. 157 for nonfinancial assets and liabilities that are only subject to fair value measurement on a nonrecurring basis. We have elected to defer the application of SFAS No. 157 for our nonfinancial assets and liabilities measured at fair value on a nonrecurring basis until the fiscal year beginning December 27, 2008, and are in the process of assessing its impact on our financial position and results of operations related to such assets and liabilities. Our financial assets and liabilities that are recorded at fair value consist primarily of the assets or liabilities arising from derivative financial instruments. The adoption of SFAS No. 157 did not have a material effect on our financial position or results of operations.
     SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

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     SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by SFAS No. 157 are as follows:
    Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.
    Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which may include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or model-derived valuations whose inputs are observable or whose significant value drivers are observable, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 2 instruments are valued based on pricing inputs as of the reporting date.
 
    Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.
     We utilize foreign currency forward contracts to protect us from unanticipated fluctuations in cash flows that may arise from volatility in currency exchange rates. We also use interest rate swap contracts to manage interest rate risk associated with some of our variable rate debt. The foreign currency forward contracts and interest rate swap contracts are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 2.
     The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 26, 2008:
         
    September 26,
    2008
Assets:
       
Foreign currency forward contracts
  $ 10,784  
Interest rate swap contracts
    2,744  
 
       
Liabilities:
       
Foreign currency forward contracts
    8,033  
Interest rate swap contracts
    445
     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R replaces SFAS No. 141, “Business Combinations” and changes the accounting treatment for business acquisitions. SFAS No. 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. Most of the provisions of SFAS No. 141R apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted. We are currently assessing the impact that SFAS No. 141R may have on our financial position, results of operations and cash flows.

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     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 amends the accounting and reporting standards for the noncontrolling interest in a subsidiary (often referred to as “minority interest”) and for the deconsolidation of a subsidiary. Under SFAS No. 160, the noncontrolling interest in a subsidiary is reported as equity in the parent company’s consolidated financial statements. SFAS No. 160 also requires that the parent company’s consolidated statement of operations include both the parent and noncontrolling interest share of the subsidiary’s statement of operations. Formerly, the noncontrolling interest share was shown as a reduction of income on the parent’s consolidated statement of operations. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS No. 160 is to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied; however, presentation and disclosure requirements shall be applied retrospectively for all periods presented. We do not believe that SFAS No. 160 will have a significant impact on our financial position, results of operations and cash flows.
     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 requires enhanced disclosures to enable investors to better understand the effects of derivative instruments and hedging activities on an entity’s financial position, financial performance and cash flows. SFAS No. 161 changes the disclosure requirements about the location and amounts of derivative instruments in an entity’s financial statements, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect the company’s financial position, financial performance and cash flows. Additionally, SFAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS No. 161 also requires more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, SFAS No. 161 requires cross-referencing within the footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently assessing the impact that SFAS No. 161 may have on our financial statement disclosures.
2. Business Combinations
     In July 2008, we acquired the majority of the assets and work force of an engineering design company for $6,500, plus up to $1,500 to be paid if certain performance milestones are met over the following two years. This company, which has an engineering center in Kolkata, India, provides engineering services to the petrochemical, refining, upstream oil and gas, and power industries. The purchase price allocation and pro forma information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global engineering and construction business segment.
     In February 2008, we acquired all of the outstanding capital stock of a biopharmaceutical engineering company, based in Philadelphia, Pennsylvania, for $8,545 plus up to $3,638 to be paid over the following three years if certain conditions are met, plus up to an additional $8,700 to be paid if certain performance milestones are met over the following three years. This company provides design, engineering, manufacture, installation, validation and startup/commissioning services to the life sciences industry. The purchase price allocation and pro forma information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global engineering and construction business segment.
     In February 2007, we purchased the stock of a Finnish company that owns patented coal flow measuring technology. The purchase price, net of cash acquired was 1,112 (approximately $1,473 at the exchange rate in effect at the time of the acquisition). The purchase price allocation and pro forma financial information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global power business segment.

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3.   Equity Interests
     We own a noncontrolling equity interest in two electric power generation projects, one waste-to-energy project and one wind farm project in Italy and in a refinery/electric power generation project in Chile. We also own a 50% noncontrolling equity interest in an Italian project which generates earnings from royalty payments linked to the price of natural gas. The two electric power generation projects in Italy are each 42% owned by us, the waste-to-energy project is 39% owned by us and the wind farm project is 50% owned by us. The project in Chile is 85% owned by us; however, we do not have a controlling interest in the Chilean project as a result of participating rights held by the minority shareholder. We account for these investments in Italy and Chile under the equity method. The following is summarized financial information for these entities (each as a whole) in which we have an equity interest:
                                 
    September 26, 2008   December 28, 2007
    Italian   Chilean   Italian   Chilean
    Projects   Project   Projects   Project
Balance Sheet Data:
                               
Current assets
  $ 281,616     $ 49,207     $ 294,482     $ 49,353  
Other assets (primarily buildings and equipment)
    657,868       139,411       656,796       146,665  
Current liabilities
    32,304       21,140       72,009       21,044  
Other liabilities (primarily long-term debt)
    586,506       70,950       576,545       81,696  
Net assets
    320,674       96,528       302,724       93,278  
                                 
    Fiscal Quarters Ended
    September 26, 2008   September 28, 2007
    Italian   Chilean   Italian   Chilean
    Projects   Project   Projects   Project
Income Statement Data:
                               
Total revenues
  $ 126,499     $ 16,385     $ 102,776     $ 27,881  
Gross earnings
    29,373       10,590       40,982       19,774  
Income before income taxes
    15,287       9,017       37,880       18,193  
Net earnings/(loss)
    (5,570 )     7,485       23,362       18,193  
                                 
    Fiscal Nine Months Ended
    September 26, 2008   September 28, 2007
    Italian   Chilean   Italian   Chilean
    Projects   Project   Projects   Project
Income Statement Data:
                               
Total revenues
  $ 357,244     $ 68,459     $ 247,517     $ 51,528  
Gross earnings
    100,725       40,967       70,513       30,420  
Income before income taxes
    61,759       37,244       61,947       25,242  
Net earnings
    24,225       30,913       37,973       25,242  
     Our share of equity in the net earnings of these partially-owned affiliates, which is recorded within other income, net on the condensed consolidated statement of operations, totaled $2,202 and $27,082 for the fiscal quarter and nine months ended September 26, 2008, respectively. Similarly, our share of equity in the net earnings of these partially-owned affiliates totaled $18,935 and $29,503 for the fiscal quarter and nine months ended September 28, 2007, respectively.
     Our investment in these equity affiliates, which is recorded within investments in and advances to unconsolidated affiliates on the condensed consolidated balance sheet, totaled $200,726 and $190,887 as of September 26, 2008 and December 28, 2007, respectively. Distributions of $24,452 and $10,946 were received during the fiscal nine months ended September 26, 2008 and September 28, 2007, respectively.

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     We have guaranteed certain performance obligations of the Chilean project. We have a contingent obligation, which is measured annually based on the operating results of the Chilean project for the preceding year. We did not have a current payment obligation under this guarantee as of December 28, 2007.
     We also have guaranteed the obligations of our subsidiary under the Chilean project’s operations and maintenance agreement. The guarantee is limited to $20,000 over the life of the operations and maintenance agreement, which extends through 2016. No amounts have ever been paid under the guarantee.
     In addition, we have provided a $10,000 debt service reserve letter of credit to cover debt service payments in the event that the Chilean project does not generate sufficient cash flow to make such payments. We are required to maintain the debt service reserve letter of credit during the term of the Chilean project’s debt, which matures in 2014. As of September 26, 2008, no amounts have been drawn under this letter of credit.
     Under the Chilean project’s operations and maintenance agreement, our subsidiary provides services for the management, operation and maintenance of the refinery/electric power generation facility. Our fees for these services were $2,328 and $6,984 for the fiscal quarter and nine months ended September 26, 2008, respectively, and were $2,077 and $6,231 for the fiscal quarter and nine months ended September 28, 2007, respectively. Our fees for these services were recorded in operating revenues on our condensed consolidated statement of operations. We had a receivable from our partially-owned affiliate in Chile of $9,300 and $6,168 recorded in trade accounts and notes receivable on our condensed consolidated balance sheet as of September 26, 2008 and December 28, 2007, respectively.

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4. Long-term Debt
     The following table shows the components of our long-term debt:
                                                 
    September 26, 2008     December 28, 2007  
    Current     Long-term     Total     Current     Long-term     Total  
Capital Lease Obligations
  $ 1,376     $ 65,940     $ 67,316     $ 1,318     $ 67,095     $ 68,413  
Special-Purpose Limited Recourse Project Debt:
                                               
Camden County Energy Recovery Associates
    9,648       31,779       41,427       9,648       31,779       41,427  
FW Power S.r.L.
          68,565       68,565             45,041       45,041  
Energia Holdings, LLC
    4,675       16,426       21,101       4,144       21,101       25,245  
Subordinated Robbins Facility Exit Funding Obligations:
                                               
1999C Bonds at 7.25% interest, due October 15, 2009
    18       19       37       18       19       37  
1999C Bonds at 7.25% interest, due October 15, 2024
          20,491       20,491             20,491       20,491  
1999D Accretion Bonds at 7% interest, due October 15, 2009
          301       301             286       286  
Intermediate Term Loans in China at 7.02% interest
                      4,107             4,107  
Term Loan in China at 6.57% interest, due December 28, 2008
    3,650             3,650                    
Other
    123       61       184       133       166       299  
 
                                   
Total
  $ 19,490     $ 203,582     $ 223,072     $ 19,368     $ 185,978     $ 205,346  
 
                                   
     Domestic Senior Credit Agreement — In October 2006, we executed a five-year domestic senior credit agreement to be used for our domestic and foreign operations. The senior credit agreement, as amended in May 2007, provides for a facility of $450,000, and includes a provision which permits future incremental increases of up to $100,000 in total availability under the facility. We can issue up to $450,000 under the letter of credit facility. A portion of the letters of credit issued under the domestic senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in the credit rating of the domestic senior credit agreement as reported by Moody’s Investors Service and/or Standard & Poor’s (“S&P”). We also have the option to use up to $100,000 of the $450,000 for revolving borrowings at a rate equal to adjusted LIBOR plus 1.50%, subject also to the performance pricing noted above. As a result of the improvement in our S&P credit rating in March 2007, we have achieved the lowest possible pricing under the performance pricing provisions of our domestic senior credit agreement.
     We had $291,775 and $245,765 of letters of credit outstanding under this agreement as of September 26, 2008 and December 28, 2007, respectively. The letter of credit fees ranged from 1.50% to 1.60% of the outstanding amount, excluding a fronting fee of 0.125% per annum. There were no funded borrowings under this agreement as of September 26, 2008 or December 28, 2007.
     Subsequent to the fiscal quarter and nine months ended September 26, 2008, we and the requisite lenders under our domestic senior credit agreement amended the domestic senior credit agreement, effective September 29, 2008 to allow us to use cash up to $750,000 to repurchase our outstanding common shares and increase the limit of permissible capital expenditures. Please see Note 13 for further information related to the amended domestic senior credit agreement.
     Subsequent to the fiscal quarter and nine months ended September 26, 2008, we acquired $19,208 of our Subordinated Robbins Facility Exit Funding Obligations, 1999C Bonds due October 15, 2024 (“1999C Robbins Bonds”) on October 3, 2008 for $19,016 of cash, plus accrued and unpaid interest to date. Please see Note 13 for further information related to the acquisition of the 1999C Robbins Bonds.

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5. Pensions and Other Postretirement Benefits
     We have defined benefit pension plans in the United States, the United Kingdom, France, Canada and Finland, and we have other postretirement benefit plans for health care and life insurance benefits in the United States and Canada.
     Pension Benefits — Our defined benefit pension plans cover certain full-time employees. Under the plans, retirement benefits are primarily a function of both years of service and level of compensation. The components of benefit cost/(income) for our pension plans are as follows:
                                                                 
    Fiscal Quarter Ended September 26, 2008     Fiscal Quarter Ended September 28, 2007  
    United     United                     United     United              
    States     Kingdom     Other     Total     States     Kingdom     Other     Total  
Net periodic benefit cost/(income):
                                                               
Service cost
  $     $ 2,614     $ 177     $ 2,791     $     $ 3,541     $ 156     $ 3,697  
Interest cost
    4,991       12,197       475       17,663       4,758       11,441       427       16,626  
Expected return on plan assets
    (6,035 )     (11,976 )     (388 )     (18,399 )     (5,517 )     (12,156 )     (451 )     (18,124 )
Amortization of transition (asset)/obligation
          (14 )     25       11             (15 )     24       9  
Amortization of prior service cost
          1,233       5       1,238             1,312       5       1,317  
Amortization of net actuarial loss
    696       4,105       116       4,917       821       4,337       168       5,326  
 
                                               
Total net periodic benefit cost/(income)
  $ (348 )   $ 8,159     $ 410     $ 8,221     $ 62     $ 8,460     $ 329     $ 8,851  
 
                                               
 
                                                               
Changes recognized in other comprehensive income:
                                                               
Amortization of transition asset/(obligation)
  $     $ 14     $ (25 )   $ (11 )   $     $ 15     $ (24 )   $ (9 )
Amortization of prior service cost
          (1,233 )     (5 )     (1,238 )           (1,312 )     (5 )     (1,317 )
Amortization of net actuarial loss
    (696 )     (4,105 )     (116 )     (4,917 )     (821 )     (4,337 )     (168 )     (5,326 )
 
                                               
Total income recognized in other comprehensive income
  $ (696 )   $ (5,324 )   $ (146 )   $ (6,166 )   $ (821 )   $ (5,634 )   $ (197 )   $ (6,652 )
 
                                               
                                                                 
    Fiscal Nine Months Ended September 26, 2008     Fiscal Nine Months Ended September 28, 2007  
    United     United                     United     United              
    States     Kingdom     Other     Total     States     Kingdom     Other     Total  
Net periodic benefit cost/(income):
                                                               
Service cost
  $     $ 8,031     $ 536     $ 8,567     $     $ 10,449     $ 455     $ 10,904  
Interest cost
    14,971       37,500       1,468       53,939       14,274       33,742       1,218       49,234  
Expected return on plan assets
    (18,106 )     (36,815 )     (1,252 )     (56,173 )     (16,549 )     (35,852 )     (1,281 )     (53,682 )
Amortization of transition (asset)/obligation
          (43 )     74       31             (46 )     67       21  
Amortization of prior service cost
          3,792       15       3,807             3,869       14       3,883  
Amortization of net actuarial loss
    2,090       12,623       345       15,058       2,464       12,965       475       15,904  
 
                                               
SFAS No. 87 net periodic benefit cost/(income)
    (1,045 )     25,088       1,186       25,229       189       25,127       948       26,264  
SFAS No. 88 cost*
                644       644                          
 
                                               
Total net periodic benefit cost/(income)
  $ (1,045 )   $ 25,088     $ 1,830     $ 25,873     $ 189     $ 25,127     $ 948     $ 26,264  
 
                                               
 
                                                               
Changes recognized in other comprehensive income:
                                                               
Amortization of transition asset/(obligation)
  $     $ 43     $ (74 )   $ (31 )   $     $ 46     $ (67 )   $ (21 )
Amortization of prior service cost
          (3,792 )     (15 )     (3,807 )           (3,869 )     (14 )     (3,883 )
Amortization of net actuarial loss
    (2,090 )     (12,623 )     (345 )     (15,058 )     (2,464 )     (12,965 )     (475 )     (15,904 )
 
                                               
Total income recognized in other comprehensive income
  $ (2,090 )   $ (16,372 )   $ (434 )   $ (18,896 )   $ (2,464 )   $ (16,788 )   $ (556 )   $ (19,808 )
 
                                               
 
*   Charges were recorded in accordance with the provisions of SFAS No. 88, “Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” related to the settlement of obligations to former employees in Canada of $644 in the fiscal nine months ended September 26, 2008.
     The U.S. pension plans, which are frozen to new entrants and additional benefit accruals, and the Canadian, Finnish and French plans are non-contributory. The U.K. plan, which is closed to new entrants, is contributory.

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     Based on the funded status at fiscal year-end 2007 and upon our most recent annual valuation report, we do not expect to be required to make any mandatory contributions to our U.S. pension plans in fiscal year 2008. We made mandatory contributions of approximately $24,700 to our foreign pension plans during the fiscal nine months ended September 26, 2008. We expect to make total mandatory contributions of approximately $32,700 to our foreign plans in fiscal year 2008. We may elect to make discretionary contributions to our U.S. and U.K. pension plans during the fiscal fourth quarter of 2008.
     Other Postretirement Benefits — Certain employees in the United States and Canada may become eligible for health care and life insurance benefits (“other postretirement benefits”) if they qualify for and commence normal or early retirement pension benefits as defined in the U.S. and Canadian pension plans while working for us. Additionally, one of our subsidiaries in the United States also has a benefit plan, referred to as the Survivor Income Plan (“SIP”), which provides coverage for an employee’s beneficiary upon the death of the employee. This plan has been closed to new entrants since 1988.
     The components of benefit cost for our other postretirement plans, including the SIP, are as follows:
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Net periodic postretirement benefit cost:
                               
Service cost
  $ 35     $ 36     $ 106     $ 105  
Interest cost
    1,156       1,191       3,470       3,572  
Amortization of prior service credit
    (1,165 )     (1,191 )     (3,496 )     (3,571 )
Amortization of net actuarial loss
    117       238       350       714  
 
                       
Net periodic postretirement benefit cost
  $ 143     $ 274     $ 430     $ 820  
 
                       
 
                               
Changes recognized in other comprehensive income:
                               
Amortization of prior service credit
  $ 1,165     $ 1,191     $ 3,496     $ 3,571  
Amortization of net actuarial loss
    (117 )     (238 )     (350 )     (714 )
 
                       
Total loss recognized in other comprehensive income
  $ 1,048     $ 953     $ 3,146     $ 2,857  
 
                       
6. Guarantees and Warranties
     We have agreed to indemnify certain third parties relating to businesses and/or assets that we previously owned and sold to such third parties. Such indemnifications relate primarily to potential environmental and tax exposures for activities conducted by us prior to the sale of such businesses and/or assets. It is not possible to predict the maximum potential amount of future payments under these or similar indemnifications due to the conditional nature of the obligations and the unique facts and circumstances involved in each particular indemnification.
                         
    Maximum   Carrying Amount of Liability
    Potential   September 26,   December 28,
    Payment   2008   2007
Environmental indemnifications
  No limit   $ 8,200     $ 6,900  
Tax indemnifications
  No limit   $     $  
     We also maintain contingencies for warranty expenses on certain of our long-term contracts. Generally, warranty contingencies are accrued over the life of the contract so that a sufficient balance is maintained to cover our aggregate exposure at the conclusion of the project.

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    Fiscal Nine Months Ended  
    September 26,     September 28,  
    2008     2007  
Warranty Liability
               
Balance at beginning of year
  $ 87,800     $ 69,900  
Accruals
    34,900       25,100  
Settlements
    (5,000 )     (10,800 )
Adjustments to provisions
    (15,200 )     (6,600 )
 
           
Balance at end of period
  $ 102,500     $ 77,600  
 
           
     We are contingently liable for performance under standby letters of credit, bank guarantees and surety bonds totaling $953,300 and $818,600 as of September 26, 2008 and December 28, 2007, respectively. These balances include the standby letters of credit issued under the domestic senior credit agreement discussed in Note 4 and from other facilities worldwide. No material claims have been made against these guarantees.
     We have also guaranteed certain performance obligations in a Chilean refinery/electric power generation project in which we hold a noncontrolling equity interest. See Note 3 for further information.
7. Preferred Shares
     We issued 599,944 preferred shares in connection with our 2004 equity-for-debt exchange. There were approximately 1,094 preferred shares outstanding as of September 26, 2008. Each preferred share is convertible at the holder’s option into 130 common shares, or up to approximately 142,273 additional common shares if all outstanding preferred shares as of September 26, 2008 are converted.
     The preferred shareholders have no voting rights except in certain limited circumstances. The preferred shares have the right to receive dividends and other distributions, including liquidating distributions, on an as-if-converted basis when and if declared and paid on the common shares. The preferred shares have a $0.01 liquidation preference per share.
8. Share-Based Compensation Plans
     Our share-based compensation plans include both restricted awards and stock option awards. Compensation cost for our share-based plans of $3,956 and $10,600 was charged against income for the fiscal quarter and nine months ended September 26, 2008, respectively. The related income tax benefit recognized in the condensed consolidated statements of operations and comprehensive income was $82 and $240 for the fiscal quarter and nine months ended September 26, 2008, respectively. Compensation cost for our share-based plans of $1,732 and $5,100 was charged against income for the fiscal quarter and nine months ended September 28, 2007, respectively. The related income tax benefit recognized in the condensed consolidated statements of operations and comprehensive income was $22 and $65 for the fiscal quarter and nine months ended September 28, 2007, respectively. We received $2,595 and $16,240 in cash from option exercises under our share-based compensation plans for the fiscal nine months ended September 26, 2008 and September 28, 2007, respectively.
     As of September 26, 2008, we had $8,885 and $10,038 of total unrecognized compensation cost related to stock options and restricted awards, respectively. Those costs are expected to be recognized as expense over a weighted-average period of approximately 21 months.
9. Common Share Purchase Warrants
     In connection with the equity-for-debt exchange consummated in 2004, we issued 4,152,914 Class A common share purchase warrants and 40,771,560 Class B common share purchase warrants. Each Class A warrant entitles its owner to purchase 3.3682 common shares at an exercise price of $4.689 per common share thereunder, subject to the terms of the warrant agreement between the warrant agent and us. The Class A warrants are exercisable on or before September 24, 2009. Each Class B warrant entitled its owner to purchase 0.1446 common shares at an exercise price of $4.689 per common share thereunder, subject to the terms and conditions of the warrant agreement between the warrant agent and us. The Class B warrants were exercisable on or before September 24, 2007.

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     In January 2006, we completed transactions that increased the number of common shares to be delivered upon the exercise of our Class A and Class B common share purchase warrants during the offer period and raised $75,336 in net proceeds. The exercise price per warrant was not increased in the offers. Holders of approximately 95% of the Class A warrants and 57% of the Class B warrants participated in the offers resulting in the aggregate issuance of approximately 16,807,000 common shares.
     Cumulatively through September 26, 2008, 3,970,840 Class A warrants and 38,730,407 Class B warrants have been exercised for 19,724,589 common shares. The number of common shares issuable upon the exercise of the remaining outstanding Class A warrants is approximately 613,262 as of September 26, 2008. The remaining outstanding Class B warrants expired on September 24, 2007.
     The holders of the Class A warrants are not entitled to vote, to receive dividends or to exercise any of the rights of common shareholders for any purpose until such warrants have been duly exercised. We currently maintain and intend to continue to maintain at all times during which the warrants are exercisable, a “shelf” registration statement relating to the issuance of common shares underlying the warrants for the benefit of the warrant holders, subject to the terms of the registration rights agreement. The registration statement became effective on December 28, 2005 and will be updated by December 28, 2008.
     Also in connection with the equity-for-debt exchange consummated in 2004, we entered into a registration rights agreement with certain selling security holders in which we agreed to file a registration statement to cover resales of our securities held by them immediately following the exchange offer. We filed a registration statement in accordance with this agreement on October 29, 2004. The registration statement, which became effective on December 23, 2004 and updated on March 22, 2006, must remain in effect until December 23, 2009 unless certain events occur to terminate our obligations under the registration rights agreement prior to that date. We plan to update the registration statement by March 22, 2009. If we fail to maintain the registration statement as required or it becomes unavailable for more than two 45-day periods in any consecutive 12-month period, we are required to pay damages at a rate of $13.7 per day for each day that the registration statement is not effective. As of September 26, 2008, the maximum exposure under this provision was approximately $5,000. We have not incurred, and do not expect to incur, any damages under the registration rights agreement.
10. Income Taxes
     Our effective tax rate is dependent on the location and amount of our taxable earnings and the effects of changes in valuation allowances. Our effective tax rates for the fiscal quarters and nine months ended September 26, 2008 and September 28, 2007 were lower than the U.S. statutory rate of 35% due principally to:
    Income earned in tax jurisdictions with tax rates lower than the U.S. statutory rate, which is expected to contribute to an approximate twelve-percentage point reduction in the effective tax rate for the full year 2008; and
 
    A valuation allowance decrease which is expected to contribute to an approximate six-percentage point reduction in the effective tax rate for the full year 2008. A decrease in our valuation allowance occurred in the fiscal quarter and nine months ended September 26, 2008 because we recognized earnings in jurisdictions where we continue to maintain a full valuation allowance (primarily the United States and Finland).
     These factors which reduce the effective tax rate were partially offset by our inability to recognize a tax benefit for losses subject to valuation allowance in certain other jurisdictions and other permanent differences.
     As we currently have positive earnings in most jurisdictions, we evaluate, on a quarterly basis, the need for the valuation allowances against deferred tax assets in those jurisdictions in which we currently maintain a valuation allowance. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary. If the trend for positive earnings continues in those jurisdictions where we have recorded a valuation allowance (primarily the United States and Finland), we may conclude that a valuation allowance is no longer needed in either or both jurisdictions.

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     Our subsidiaries file income tax returns in numerous tax jurisdictions, including the United States, several U.S. states and numerous non-U.S. jurisdictions around the world. Tax returns are also filed in jurisdictions where our subsidiaries execute project-related work. The statute of limitations varies by the various jurisdictions in which we operate. Because of the number of jurisdictions in which we file tax returns, in any given year the statute of limitations in certain jurisdictions may expire without examination within the 12-month period from the balance sheet date. As a result, we expect recurring changes in unrecognized tax benefits due to the expiration of the statute of limitations, none of which are expected to be individually significant. With few exceptions, we are no longer subject to U.S. (including federal, state and local) or non-U.S. income tax examinations by tax authorities for years before fiscal year 2002.
     During the fiscal quarter ended June 27, 2008, we settled a tax audit in the Asia Pacific region which resulted in a $3,200 reduction of unrecognized tax benefits and a corresponding reduction in the provision for income taxes. A number of tax years are also under audit by the relevant state and foreign tax authorities. We anticipate that several of these audits may be concluded in the foreseeable future, including in fiscal year 2008. Based on the status of these audits, it is reasonably possible that the conclusion of the audits may result in a reduction of unrecognized tax benefits. However, it is not possible to estimate the impact of this change at this time.
     We recognize interest accrued on the unrecognized tax benefits in interest expense and penalties on the unrecognized tax benefits in other deductions, net on our condensed consolidated statement of operations. During the fiscal quarter and nine months ended September 26, 2008, we recorded net interest expense and net penalties of $330 and $853, respectively, of which the amount for the fiscal nine months ended September 26, 2008 is net of $3,518 of previously accrued tax penalties which were ultimately not assessed. During the fiscal quarter and nine months ended September 28, 2007, we recorded $1,074 and $1,874 in interest expense and penalties, respectively.
11. Business Segments
     We operate through two business groups: our Global Engineering and Construction Group (“Global E&C Group”) and our Global Power Group.
Global Engineering and Construction Group
     Our Global E&C Group, which operates worldwide, designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related infrastructure, including power generation and distribution facilities, and gasification facilities. Our Global E&C Group is also involved in the design of facilities in new or developing market sectors, including carbon capture and storage, solid fuel-fired integrated gasification combined-cycle power plants, coal-to-liquids, coal-to-chemicals and biofuels. Our Global E&C Group generates revenues from engineering, procurement and construction activities pursuant to contracts spanning up to approximately four years in duration and from returns on its equity investments in various power production facilities.
     Our Global E&C Group provides the following services:
    Design, engineering, project management, construction and construction management services, including the procurement of equipment, materials and services from third-party suppliers and contractors.
 
    Environmental remediation services, together with related technical, engineering, design and regulatory services.
 
    Development, engineering, procurement, construction, ownership and operation of power generation facilities, from conventional and renewable sources, and waste-to-energy facilities in Europe.

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Global Power Group
     Our Global Power Group designs, manufactures and erects steam generating and auxiliary equipment for electric power generating stations and industrial facilities worldwide and owns and/or operates several cogeneration, independent power production and waste-to-energy facilities, as well as power generation facilities for the process and petrochemical industries. Our Global Power Group generates revenues from engineering activities, equipment supply, construction contracts, operating and maintenance agreements, royalties from licensing its technology, and from returns on its investments in various power production facilities.
     Our Global Power Group’s steam generating equipment includes a full range of technologies, offering independent power producers, utilities and industrial clients high-value technology solutions for converting a wide range of fuels, such as coal, petroleum coke, oil, gas, biomass and municipal solid waste, into steam, which can be used for power generation, district heating and in industrial processes.
     Our Global Power Group offers several other products and services related to steam generators:
    Design, manufacture and installation of auxiliary equipment, which includes feedwater heaters, steam condensers and heat-recovery equipment.
 
    A full line of new and retrofit nitrogen-oxide (“NOx”) reduction systems such as selective non-catalytic and catalytic NOx reduction systems as well as complete low NOx combustion systems.
 
    A broad range of steam generator site services, including construction and erection services, engineering, plant upgrading and life extensions.
 
    Research, analysis and experimental work in fluid dynamics, heat transfer, combustion, fuel technology, materials engineering and solid mechanics.
Corporate and Finance Group
     In addition to these two business groups, which also represent operating segments for financial reporting purposes, we report corporate center expenses and expenses related to certain legacy liabilities, such as asbestos, in the Corporate and Finance Group (“C&F Group”), which we also treat as an operating segment for financial reporting purposes.
     EBITDA is the primary measure of operating performance used by our chief operating decision maker.

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            Global     Global     C&F  
    Total     E&C Group     Power Group     Group (1)  
Fiscal quarter ended September 26, 2008
                               
Third-party revenues
  $ 1,718,355     $ 1,287,405     $ 430,950     $  
 
                       
EBITDA (2)
  $ 165,243     $ 122,828     $ 64,753     $ (22,338 )
 
                         
Less: Interest expense
    (5,193 )                        
Less: Depreciation and amortization
    (11,080 )                        
 
                             
Income before income taxes
    148,970                          
Provision for income taxes
    (21,050 )                        
 
                             
Net income
  $ 127,920                          
 
                             
 
                               
Fiscal quarter ended September 28, 2007
                               
Third-party revenues
  $ 1,299,872     $ 951,402     $ 348,470     $  
 
                       
EBITDA (3)
  $ 178,977     $ 129,232     $ 58,390     $ (8,645 )
 
                         
Less: Interest expense
    (4,716 )                        
Less: Depreciation and amortization
    (9,721 )                        
 
                             
Income before income taxes
    164,540                          
Provision for income taxes
    (35,439 )                        
 
                             
Net income
  $ 129,101                          
 
                             
 
                               
Fiscal nine months ended September 26, 2008
                               
Third-party revenues
  $ 5,215,101     $ 3,928,136     $ 1,286,965     $  
 
                       
EBITDA (4)
  $ 580,991     $ 412,976     $ 197,547     $ (29,532 )
 
                         
Less: Interest expense
    (16,204 )                        
Less: Depreciation and amortization
    (33,366 )                        
 
                             
Income before income taxes
    531,421                          
Provision for income taxes
    (104,683 )                        
 
                             
Net income
  $ 426,738                          
 
                             
 
                               
Fiscal nine months ended September 28, 2007
                               
Third-party revenues
  $ 3,641,760     $ 2,626,816     $ 1,014,944     $  
 
                       
EBITDA (5)
  $ 459,872     $ 395,364     $ 99,780     $ (35,272 )
 
                         
Less: Interest expense
    (14,652 )                        
Less: Depreciation and amortization
    (27,120 )                        
 
                             
Income before income taxes
    418,100                          
Provision for income taxes
    (102,324 )                        
 
                             
Net income
  $ 315,776                          
 
                             
 
(1)   Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest.
 
(2)   Includes in the fiscal quarter ended September 26, 2008: increased/(decreased) contract profit of $9,120 from the regular re-evaluation of final estimated contract profits*: $12,750 in our Global E&C Group and $(3,630) in our Global Power Group; and a charge of $1,725 in our C&F Group on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.
 
(3)   Includes in the fiscal quarter ended September 28, 2007: increased contract profit of $17,980 from the regular re-evaluation of final estimated contract profits*: $10,810 in our Global E&C Group and $7,170 in our Global Power Group; and a gain of $8,633 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers.
 
(4)   Includes in the fiscal nine months ended September 26, 2008: increased/(decreased) contract profit of $26,070 from the regular re-evaluation of final estimated contract profits*: $35,770 in our Global E&C Group and $(9,700) in our Global Power Group; a gain of $35,913 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers; and a charge of $5,175 in our C&F Group on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.

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(5)   Includes in the fiscal nine months ended September 28, 2007: increased/(decreased) contract profit of $34,120 from the regular re-evaluation of final estimated contract profits*: $50,550 in our Global E&C Group and $(16,430) in our Global Power Group; and a gain of $8,633 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers.
 
*   Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 regarding changes in our final estimated contract profits.
     The accounting policies of our business segments are the same as those described in our summary of significant accounting policies. The only significant intersegment transactions relate to interest on intercompany balances. We account for interest on those arrangements as if they were third party transactions—i.e. at current market rates, and we include the elimination of that activity in the results of the C&F Group.
     Operating revenues by industry were as follows:
                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,     September 26,     September 28,  
    2008     2007     2008     2007  
Power generation
  $ 412,228     $ 353,098     $ 1,229,081     $ 999,347  
Oil refining
    438,843       370,048       1,198,499       975,531  
Pharmaceutical
    21,267       40,571       55,376       133,267  
Oil and gas
    431,059       213,567       1,392,904       669,259  
Chemical/petrochemical
    365,460       272,568       1,196,405       718,328  
Power plant operation and maintenance
    32,128       31,153       98,034       90,678  
Environmental
    8,089       16,126       23,753       40,305  
Other, net of eliminations
    9,281       2,741       21,049       15,045  
 
                       
Total third-party revenues
  $ 1,718,355     $ 1,299,872     $ 5,215,101     $ 3,641,760  
 
                       
12. Litigation and Uncertainties
Asbestos
     Some of our U.S. and U.K. subsidiaries are defendants in numerous asbestos-related lawsuits and out-of-court informal claims pending in the United States and United Kingdom. Plaintiffs claim damages for personal injury alleged to have arisen from exposure to or use of asbestos in connection with work allegedly performed by our subsidiaries during the 1970s and earlier.
     United States
     A summary of U.S. claim activity is as follows:
                                 
    Number of Claims
    Fiscal Quarters Ended   Fiscal Nine Months Ended
    September 26,   September 28,   September 26,   September 28,
    2008   2007   2008   2007
Open claims at beginning of period
    130,740       133,580       131,340       135,890  
New claims
    860       1,080       3,710       4,160  
Claims resolved
    (1,230 )     (1,850 )     (4,680 )     (7,240 )
 
                               
Open claims at end of period
    130,370       132,810       130,370       132,810  
 
                               
     We had the following U.S. asbestos-related assets and liabilities recorded on our condensed consolidated balance sheet as of the dates set forth below. Total U.S. asbestos-related liabilities are estimated through the fiscal third quarter of 2023. Although it is likely that claims will continue to be filed after that date, the uncertainties inherent in any long-term forecast prevent us from making reliable estimates of the indemnity and defense costs that might be incurred after that date.

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    September 26,     December 28,  
    2008     2007  
Asbestos-related assets recorded within:
               
Accounts and notes receivable-other
  $ 41,200     $ 47,100  
Asbestos-related insurance recovery receivable
    244,500       279,100  
 
           
Total asbestos-related assets
  $ 285,700     $ 326,200  
 
           
 
               
Asbestos-related liabilities recorded within:
               
Accrued expenses
  $ 63,000     $ 72,000  
Asbestos-related liability
    290,900       331,300  
 
           
Total asbestos-related liabilities
  $ 353,900     $ 403,300  
 
           
     Since fiscal year-end 2004, we have worked with Analysis, Research & Planning Corporation (“ARPC”), nationally recognized consultants in projecting asbestos liabilities, to estimate the amount of asbestos-related indemnity and defense costs at year-end for the next 15 years. Based on its review of fiscal year 2007 activity, ARPC recommended that the assumptions used to estimate our future asbestos liability be updated as of fiscal year-end 2007. Accordingly, we developed a revised estimate of our indemnity and defense costs through fiscal year-end 2022 considering the advice of ARPC. In the fiscal fourth quarter of 2007, we increased our liability for asbestos indemnity and defense costs through fiscal year-end 2022 to $403,300, which brought our liability to a level consistent with ARPC’s reasonable best estimate. In connection with updating our estimated asbestos liability and related asset, we recorded a charge of $7,400 in the fiscal fourth quarter of 2007. Our estimated asbestos liability increased during the fiscal nine months ended September 26, 2008 by $6,400, which represents the rolling 15-year asbestos-related liability estimate, and was reduced by payments amounting to approximately $55,800.
     The amount paid for asbestos litigation, defense and case resolution was $18,600 and $55,800 for the fiscal quarter and nine months ended September 26, 2008, respectively, and $21,800 and $66,700 for the fiscal quarter and nine months ended September 28, 2007, respectively. In fiscal year 2008, proceeds from settlements with our insurers exceeded payments made by $10,600 and $21,800 in the fiscal quarter and nine months ended September 26, 2008, respectively. We funded $1,500 and $30,500 of the payments made during the fiscal quarter and nine months ended September 28, 2007, respectively, while all remaining amounts were paid from insurance proceeds. Through September 26, 2008, total cumulative indemnity costs paid were approximately $652,200 and total cumulative defense costs paid were approximately $277,300.
     As of September 26, 2008, total asbestos-related liabilities were comprised of an estimated liability of $130,000 relating to open (outstanding) claims being valued and an estimated liability of $223,900 relating to future unasserted claims through the fiscal third quarter of 2023.
     Our liability estimate is based upon the following information and/or assumptions: number of open claims, forecasted number of future claims, estimated average cost per claim by disease type - mesothelioma, lung cancer and non-malignancies — and the breakdown of known and future claims into disease type — mesothelioma, lung cancer or non-malignancies. The total estimated liability, which has not been discounted for the time value of money, includes both the estimate of forecasted indemnity amounts and forecasted defense costs. Total defense costs and indemnity liability payments are estimated to be incurred through the fiscal third quarter of 2023, during which period the incidence of new claims is forecasted to decrease each year. We believe that it is likely that there will be new claims filed after the fiscal third quarter of 2023, but in light of uncertainties inherent in long-term forecasts, we do not believe that we can reasonably estimate the indemnity and defense costs that might be incurred after the fiscal third quarter of 2023. Historically, defense costs have represented approximately 29.8% of total defense and indemnity costs.
     The overall historic average combined indemnity and defense cost per resolved claim through September 26, 2008 has been approximately $2.7. The average cost per resolved claim is increasing and we believe will continue to increase in the future.

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     The asbestos-related asset recorded within accounts and notes receivable-other as of September 26, 2008 reflects amounts due in the next 12 months under executed settlement agreements with insurers and does not include any estimate for future settlements. The recorded asbestos-related insurance recovery receivable includes an estimate of recoveries from insurers in the unsettled insurance coverage litigation referred to below based upon the application of New Jersey law to certain insurance coverage issues and assumptions relating to cost allocation and other factors as well as an estimate of the amount of recoveries under existing settlements with other insurers. Such amounts have not been discounted for the time value of money.
     Since fiscal year-end 2005, we have worked with Peterson Risk Consulting, nationally recognized experts in the estimation of insurance recoveries, to review our estimate of the value of the settled insurance asset and assist in the estimation of our unsettled asbestos insurance asset. Based on insurance policy data, historical claim data, future liability estimates including the expected timing of payments and allocation methodology assumptions we provided them, Peterson Risk Consulting provided an analysis of the unsettled insurance asset as of September 26, 2008. We utilized that analysis to determine our estimate of the value of the unsettled insurance asset as of September 26, 2008.
     As of September 26, 2008, we estimated the value of our unsettled asbestos insurance asset related to ongoing litigation in New York state court with our subsidiaries’ insurers at $23,300. The litigation relates to the amounts of insurance coverage available for asbestos-related claims and the proper allocation of the coverage among our subsidiaries’ various insurers and our subsidiaries as self-insurers. We believe that any amounts that our subsidiaries might be allocated as self-insurer would be immaterial.
     An adverse outcome in the pending insurance litigation described above could limit our remaining insurance recoveries and result in a reduction in our insurance asset. However, a favorable outcome in all or part of the litigation could increase remaining insurance recoveries above our current estimate. If we prevail in whole or in part in the litigation, we will re-value our asset relating to remaining available insurance recoveries based on the asbestos liability estimated at that time.
     Over the last several years, certain of our subsidiaries have entered into settlement agreements calling for insurers to make lump-sum payments, as well as payments over time, for use by our subsidiaries to fund asbestos-related indemnity and defense costs and, in certain cases, for reimbursement for portions of out-of-pocket costs previously incurred.
     In the fiscal nine months ended September 28, 2007, our subsidiaries reached agreements to settle their disputed asbestos-related insurance coverage with two additional insurers. We recorded a gain of $8,600 for these settlements in the fiscal nine months ended September 28, 2007, of which both settlements occurred in the third fiscal quarter.
     In the fiscal nine months ended September 26, 2008, our subsidiaries reached agreements to settle their disputed asbestos-related insurance coverage with two additional insurers. We recorded a gain of $35,900 for these settlements in the fiscal nine months ended September 26, 2008, of which both settlements occurred prior to the third fiscal quarter. We received cash of $40,500 from these 2008 settlements during the fiscal nine months ended September 26, 2008.
     We intend to continue to attempt to negotiate additional settlements where achievable on a reasonable basis in order to minimize the amount of future costs that we would be required to fund out of the cash flow generated from our operations. Unless we settle with the remaining insurers at recovery amounts significantly in excess of our current estimate, it is likely that the amount of our insurance settlements will not cover all future asbestos-related costs and we will be required to fund a portion of such future costs, which will reduce our cash flows and working capital.
     In fiscal year 2006, we were successful in our appeal of a New York state trial court decision that previously had held that New York, rather than New Jersey, law applies in the above coverage litigation with our subsidiaries’ insurers, and as a result, we increased our insurance asset and recorded a gain of $19,500. On February 13, 2007, our subsidiaries’ insurers were granted permission by the appellate court to appeal the decision to the New York Court of Appeals, the state’s highest court. On October 11, 2007, the New York Court of Appeals upheld the appellate court decision in our favor.

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     Even if the coverage litigation is resolved in a manner favorable to us, our insurance recoveries (both from the litigation and from settlements) may be limited by insolvencies among our insurers. We have not assumed recovery in the estimate of our asbestos insurance asset from any of our currently insolvent insurers. Other insurers may become insolvent in the future and our insurers may fail to reimburse amounts owed to us on a timely basis. Failure to realize the expected insurance recoveries, or delays in receiving material amounts from our insurers, could have a material adverse effect on our financial condition and our cash flows.
     Based on the fiscal year-end 2007 liability estimate, an increase of 25% in the average per claim indemnity settlement amount would increase the liability by $70,400 and the impact on expense would be dependent upon available insurance recoveries. Assuming no change to the assumptions currently used to estimate our insurance asset, this increase would result in a charge in the statement of operations in the range of approximately 70% to 80% of the increase in the liability. Long-term cash flows would ultimately change by the same amount. Should there be an increase in the estimated liability in excess of this 25%, the percentage of that increase that would be expected to be funded by additional insurance recoveries will decline.
     We had net cash inflows of $21,800 as a result of insurance settlement proceeds in excess of the asbestos liability indemnity payments and defense costs during the fiscal nine months ended September 26, 2008. We expect to have net cash inflows of $17,400 as a result of insurance settlement proceeds in excess of the asbestos liability indemnity and defense costs for the full twelve months of fiscal year 2008. This estimate assumes no additional settlements with insurance companies or elections by us to fund additional payments. As we continue to collect cash from insurance settlements and assuming no increase in our asbestos-related insurance liability or any future insurance settlements, the asbestos-related insurance receivable recorded on our condensed consolidated balance sheet will continue to decrease.
     The estimate of the liabilities and assets related to asbestos claims and recoveries is subject to a number of uncertainties that may result in significant changes in the current estimates. Among these are uncertainties as to the ultimate number and type of claims filed, the amounts of claim costs, the impact of bankruptcies of other companies with asbestos claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, as well as potential legislative changes. Increases in the number of claims filed or costs to resolve those claims could cause us to increase further the estimates of the costs associated with asbestos claims and could have a material adverse effect on our financial condition, results of operations and cash flows.
     United Kingdom
     Some of our subsidiaries in the United Kingdom have also received claims alleging personal injury arising from exposure to asbestos. To date, 889 claims have been brought against our U.K. subsidiaries of which 347 remained open as of September 26, 2008. None of the settled claims has resulted in material costs to us.
     As of September 26, 2008, we had recorded total liabilities of $46,000 comprised of an estimated liability relating to open (outstanding) claims of $7,600 and an estimated liability relating to future unasserted claims through the fiscal third quarter of 2023 of $38,400. Of the total, $2,800 was recorded in accrued expenses and $43,200 was recorded in asbestos-related liability on the condensed consolidated balance sheet. An asset in an equal amount was recorded for the expected U.K. asbestos-related insurance recoveries, of which $2,800 was recorded in accounts and notes receivable-other and $43,200 was recorded as asbestos-related insurance recovery receivable on the condensed consolidated balance sheet. The liability estimates are based on a U.K. House of Lords judgment that pleural plaque claims do not amount to a compensable injury and accordingly, we have reduced our liability assessment. If this ruling is reversed by legislation, the total asbestos liability and related asset recorded in the U.K. would be approximately $62,200.
Project Claims
     In the ordinary course of business, we are parties to litigation involving clients and subcontractors arising out of project contracts. Such litigation includes claims and counterclaims by and against us for canceled contracts, for additional costs incurred in excess of current contract provisions, as well as for back charges for alleged breaches of warranty and other contract commitments. If we were found to be liable for any of the claims/counterclaims against us, we would incur a charge against earnings to the extent a reserve had not been established for the matter in our accounts or if the liability exceeds established reserves.

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     Power Plant Arbitration — Eastern Europe
     In June 2006, we commenced arbitration against a client seeking final payment for our services in connection with two power plants that we designed and built in Eastern Europe. The dispute primarily concerns whether we are liable to the client for liquidated damages (“LDs”) under the contract for delayed completion of the projects. The client contends that it is owed LDs, limited under the contract at approximately 37,600 (approximately $54,900 at the exchange rate in effect as of September 26, 2008), and is retaining as security for these LDs approximately 22,000 (approximately $32,200 at the exchange rate in effect as of September 26, 2008) in contract payments otherwise due to us for work performed. The client contends that it is owed an additional 6,900 (approximately $10,100 at the exchange rate in effect as of September 26, 2008) for the cost of consumable materials it had to incur due to the extended commissioning period on both projects, the cost to relocate a piece of equipment on one of the projects and the cost of various warranty repairs and punch list work. We are seeking payment of the 22,000 (approximately $32,200 at the exchange rate in effect as of September 26, 2008 and which is recorded within contracts in process on the condensed consolidated balance sheet) in retention that is being held by the client for LDs, plus approximately 4,900 (approximately $7,200 at the exchange rate in effect as of September 26, 2008) in interest on the retained funds, as well as approximately 9,100 (approximately $13,300 at the exchange rate in effect as of September 26, 2008) in additional compensation for extra work performed beyond the original scope of the contracts and the client’s failure to procure the required property insurance for the project, which should have provided coverage for some of the damages we incurred on the project related to turbine repairs. In October 2008, a liability award by the arbitration panel in our favor was received. The award includes amounts that are “fixed” and amounts that require substantiation at a hearing on damages, which has not yet been scheduled by the panel. With estimated interest to be awarded at the damages hearing, we believe the fixed amount awarded will be in line with our previously estimated recovery.
     Power Plant Dispute — Ireland
     In 2006, a dispute arose with a client because of material corrosion that is occurring at two power plants we designed and built in Ireland, which began operation in December 2005 and June 2006. The boilers at both plants are designed to burn milled peat as the primary fuel, supplied from different local sources. The peat being supplied is out of the range specified by our contract and, while the matter is still under investigation, we believe this variation from the agreed specifications is the cause of alkali halides corrosion that is affecting the boiler tubes. We have identified a technical solution to ameliorate the boiler tube corrosion, and we and the client are in the process of evaluating the proposed solution for the boiler tube corrosion in light of continued investigation and data collection and analysis. Disavowing responsibility for the fuel specification, the client has refused to pay for the cost of the corrective work and has reserved its rights against us under the contract, which could include repairing or rejecting the plants and recovering consequential damages in the event we are determined to be grossly negligent. We have advised the client that we are not responsible for the cost of corrective work to address corrosion resulting from out-of-specification fuel and we have been engaging in discussions with the client regarding our respective claims.
     There is also corrosion occurring to subcontractor-provided emissions control equipment and induction fans at the back-end of the power plants. The cause of this back-end corrosion, which we discovered during the fiscal second quarter of 2007 to be more extensive than previously assessed, is under investigation. Based upon the information gathered to date, we believe the corrosion is due principally to the low set point temperature design of the emissions control equipment that was set by our subcontractor. If this proves to be the case, we believe the subcontractor would be responsible for the cost to remedy this problem under our agreement with them, although we may have direct responsibility for this cost to the client under our agreement with them. To date, the subcontractor has denied responsibility for the corrosion, contending it is the result of out-of-specification fuel supplied by the client. We have reserved our rights against the client if this proves to be the case. To the extent that we incur costs for correcting this problem, we intend to pursue claims against our subcontractor and/or our client, depending upon the cause of the corrosion. Due to the potential magnitude of the amounts involved, there can be no assurance that we will collect amounts for which our subcontractor may be determined to be liable. From a plant rejection standpoint, we do not believe that the back-end corrective work will materially impact our availability guaranty to the client described below.

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     The contract for these plants contains an availability guaranty requiring the plants to meet specified energy generation levels over a three year period. The availability guaranty is expressly conditioned upon the use of the contract-specified fuel. The availability guaranty provides for liquidated damages which could reach the contract cap for liquidated damages of 17,500 (approximately $25,600 at the exchange rate in effect as of September 26, 2008). In addition to liquidated damages, in the event that availability of either of the plants as an average of the best two out of the first three years of operation is 80% or below, the client may be entitled to certain remedies, the most significant of which would be the right to reject both plants and seek reimbursement of the 351,000 contract price paid for the plants (approximately $513,000 at the exchange rate in effect as of September 26, 2008) plus restoration costs at the sites. The client has alleged that at least one of the plants has failed to meet the availability guaranty which we have disputed. We have advised the client that we do not believe we are responsible under our availability guaranty (which is expressly subject to the client’s provision of specified fuel).
     Under the contract, disputes are to be arbitrated under The Institution of Engineers of Ireland Arbitration Procedure. On May 13, 2008, the client served a notice, referring the parties’ dispute to arbitration. An arbitration panel has not been appointed and we continue to engage in discussions with the client at its request to resolve this dispute as referenced above. Although no pleading has been filed by the client in the proceeding, damages that the client may seek could include, but may not be limited to, the cost to correct the corrosion in the boiler tubes and emissions control equipment, liquidated damages under the availability guaranty, consequential damages, including but not limited to lost profits, in the event gross negligence is proven and, in the event of rejection, the total amount paid in respect of the plants, under the contract or otherwise, plus the cost to dismantle the plants. As such, the costs claimed could exceed the above-stated contract price paid for the plants and liquidated damages. We intend to vigorously oppose such claims if asserted in the arbitration.
     We have completed the necessary corrective actions for certain defects in the conveyor equipment at the plants. While we believe that the subcontractor that provided the equipment is responsible for the defects, our investigation is continuing.
     During the fiscal fourth quarter of 2006, we established a contingency of $25,000 in relation to this project. Primarily as a result of the fiscal second quarter of 2007 discovery of the more extensive back-end corrosion, the contingency was increased by $30,000 during the fiscal second quarter of 2007.
     The performance of our subsidiary executing the foregoing contract in Ireland is guaranteed by Foster Wheeler Ltd. In addition, there are 16,700 (approximately $24,400 at the exchange rate in effect as of September 26, 2008) of outstanding retention bonds that have been issued in favor of the client.
     Due to the inherent commercial, legal and technical uncertainties underlying the estimation of all of the project claims described above, the amounts ultimately realized or paid by us could differ materially from the balances, if any, included in our financial statements, which could result in additional material charges against earnings, and which could also materially adversely impact our financial condition and cash flows.
Camden County Waste-to-Energy Project
     One of our project subsidiaries, Camden County Energy Recovery Associates, LP (“CCERA”) owns and operates a waste-to-energy facility in Camden County, New Jersey (the “Project”). The Pollution Control Finance Authority of Camden County (“PCFA”) issued bonds to finance the construction of the Project and to acquire a landfill for Camden County’s use. Pursuant to a loan agreement between the PCFA and CCERA, proceeds from the bonds were loaned by the PCFA to CCERA and used by CCERA to finance the construction of the facility. Accordingly, the proceeds of this loan were recorded as debt on CCERA’s balance sheet and, therefore, are included in our condensed consolidated balance sheet. CCERA’s obligation to service the debt incurred pursuant to the loan agreement is limited to depositing all tipping fees and electric revenues received with the trustee of the PCFA bonds. The trustee is required to pay CCERA its service fees prior to servicing the PCFA bonds. CCERA has no other debt repayment obligations under the loan agreement with the PCFA.
     In 1997, the United States Supreme Court effectively invalidated New Jersey’s long-standing municipal solid waste flow rules and regulations, eliminating the guaranteed supply of municipal solid waste to the Project with its corresponding tipping fee revenue. As a result, tipping fees have been reduced to market rate in order to provide a steady supply of fuel to the Project. Since the ruling, those market-based revenues have not been, and are not expected to be, sufficient to service the debt on outstanding bonds issued by the PCFA to finance the construction of the Project.

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     In 1998, CCERA filed suit against the PCFA and other parties seeking, among other things, to void the applicable contracts and agreements governing the Project (Camden County Energy Recovery Assoc. v. N.J. Department of Environmental Protection, et al., Superior Court of New Jersey, Mercer County, L-268-98). Since 1999, the State of New Jersey has provided subsidies sufficient to ensure the payment of each of the PCFA’s debt service payments as they became due. The bonds outstanding in connection with the Project were issued by the PCFA, not by us or CCERA, and the bonds are not guaranteed by either us or CCERA. In the litigation, the defendants have asserted, among other things, that an equitable portion of the outstanding debt on the Project should be allocated to CCERA even though CCERA did not guarantee the bonds.
     At this time, we cannot determine the ultimate outcome of the foregoing and the potential effects on CCERA and the Project. If the State of New Jersey were to fail to subsidize the debt service, and there were to be a default on a debt service payment, the bondholders might proceed to attempt to exercise their remedies, by among other things, seizing the collateral securing the bonds. We do not believe this collateral includes CCERA’s plant.
Environmental Matters
     CERCLA and Other Remedial Matters
     Under U.S. federal statutes, such as the Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), the Clean Water Act and the Clean Air Act, and similar state laws, the current owner or operator of real property and the past owners or operators of real property (if disposal of toxic or hazardous substances took place during such past ownership or operation) may be jointly and severally liable for the costs of removal or remediation of toxic or hazardous substances on or under their property, regardless of whether such materials were released in violation of law or whether the owner or operator knew of, or was responsible for, the presence of such substances. Moreover, under CERCLA and similar state laws, persons who arrange for the disposal or treatment of hazardous or toxic substances may also be jointly and severally liable for the costs of the removal or remediation of such substances at a disposal or treatment site, whether or not such site was owned or operated by such person, which we refer to as an off-site facility. Liability at such off-site facilities is typically allocated among all of the financially viable responsible parties based on such factors as the relative amount of waste contributed to a site, toxicity of such waste, relationship of the waste contributed by a party to the remedy chosen for the site and other factors.
     We currently own and operate industrial facilities and we have also transferred our interests in industrial facilities that we formerly owned or operated. It is likely that as a result of our current or former operations, hazardous substances have affected the facilities or the real property on which they are or were situated. We also have received and may continue to receive claims pursuant to indemnity obligations from the present owners of facilities we have transferred, which claims may require us to incur costs for investigation and/or remediation.
     We are currently engaged in the investigation and/or remediation under the supervision of the applicable regulatory authorities at four of our or our subsidiaries’ former facilities. In addition, we sometimes engage in investigation and/or remediation without the supervision of a regulatory authority. Although we do not expect the environmental conditions at our present or former facilities to cause us to incur material costs in excess of those for which reserves have been established, it is possible that various events could cause us to incur costs materially in excess of our present reserves in order to fully resolve any issues surrounding those conditions. Further, no assurance can be provided that we will not discover additional environmental conditions at our currently or formerly owned or operated properties, or that additional claims will not be made with respect to formerly owned properties, requiring us to incur material expenditures to investigate and/or remediate such conditions.
     We have been notified that we are a potentially responsible party (“PRP”) under CERCLA or similar state laws at three off-site facilities. At each of these sites, our liability should be substantially less than the total site remediation costs because the percentage of waste attributable to us compared to that attributable to all other PRPs is low. We do not believe that our share of cleanup obligations at any of the off-site facilities as to which we have received a notice of potential liability will exceed $500 in the aggregate. We have also received and responded to a request for information from the United States Environmental Protection Agency (“USEPA”) regarding a fourth off-site facility. We do not know what, if any, further actions USEPA may take regarding this fourth off-site facility.

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     Mountain Top
     In February 1988, one of our subsidiaries, Foster Wheeler Energy Corporation (“FWEC”), entered into a Consent Agreement and Order with the USEPA and the Pennsylvania Department of Environmental Protection (“PADEP”) regarding its former manufacturing facility in Mountain Top, Pennsylvania. The order essentially required FWEC to investigate and remediate as necessary contaminants, including trichloroethylene (“TCE”), in the soil and groundwater at the facility. Pursuant to the order, in 1993 FWEC installed a “pump and treat” system to remove TCE from the groundwater. It is not possible at the present time to predict how long FWEC will be required to operate and maintain this system.
     In the fall of 2004, FWEC sampled the private domestic water supply wells of certain residences in Mountain Top and identified approximately 30 residences whose water supply contained TCE at levels in excess of Safe Drinking Water Act standards. The subject residences are located approximately one mile to the southwest of where the TCE previously was discovered in the soils at the former FWEC facility.
     Since that time, FWEC, USEPA, and PADEP have cooperated in an investigation to, among other things, attempt to identify the source(s) of the TCE in the residential wells. Although FWEC believed the evidence available was not sufficient to support a determination that FWEC was responsible for the TCE in the residential wells, FWEC in October 2004 began providing the potentially affected residences with bottled water. It thereafter arranged for the installation, maintenance, and testing of filters to remove the TCE from the water being drawn from the wells. In August 2005, FWEC entered into a settlement agreement with USEPA whereby FWEC agreed to arrange and pay for the hookup of public water to the affected residences, which involved the extension of a water main and the installation of laterals from the main to the affected residences. The foregoing hookups have been completed, but there may be a limited number of additional hookups in the future. As residences were hooked up, FWEC ceased providing bottled water and filters to them. FWEC is incurring costs related to public outreach and communications in the affected area. FWEC may be required to pay the agencies’ costs in overseeing and responding to the situation. FWEC is likely to incur further costs in connection with a Remedial Investigation / Feasibility Study, as well as costs for continuing to monitor the groundwater in the area of the affected residences. FWEC has accrued its best estimate of the cost of the foregoing and it reviews this estimate on a quarterly basis.
     Other costs to which FWEC could be exposed could include, among other things, FWEC’s counsel and consulting fees, further agency oversight and/or response costs, costs and/or exposure related to potential litigation, and other costs related to possible further investigation and/or remediation. At present, it is not possible to determine whether FWEC will be determined to be liable for some or all of the items described in this paragraph, nor is it possible to reliably estimate the potential liability associated with the items.
     If one or more third-parties are determined to be a source of the TCE, FWEC will evaluate its options regarding the potential recovery of the costs FWEC has incurred, which options could include seeking to recover those costs from those determined to be a source.
     Between March 2006 and May 2006, complaints against FWEC were filed in three separate actions: Sarah Martin et al. v. Foster Wheeler Energy Corporation, Case No. 3376-06, Court of Common Pleas, Luzerne County, Pennsylvania (subsequently removed to the United States District Court, Middle District of Pennsylvania), Donna Rose Cunningham et al. v. Foster Wheeler Energy Corporation, Case No. 3:CV-06-0805, United States District Court, Middle District of Pennsylvania, and Gary Prezkop, Personal Representative of the Estate of Mary Prezkop, Deceased, and in his own right, v. Foster Wheeler Energy Corporation et al., Case No. 000545, Court of Common Pleas, Philadelphia County, Pennsylvania. The complaints claimed to be on behalf of those owning or residing on property impacted or threatened with impacts of the TCE released from the former FWEC facility. The complaints sought to recover costs of environmental remediation and continued environmental monitoring of plaintiffs’ property, diminution in property value, costs associated with obtaining healthy water, the establishment of medical monitoring trust funds, and damages for emotional distress. One complaint was on behalf of a class, and one included claims for wrongful death. FWEC has since resolved all of the above litigation for amounts that, individually and in the aggregate, did not have a material impact on our financial position, results of operations or cash flows. Additionally, in September 2008, FWEC was notified by claimant’s counsel of a potential new claim for personal injuries allegedly related to exposure to TCE in the affected area. FWEC is in the process of investigating the potential claim, and it is premature to predict its possible outcome.

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     Other Environmental Matters
     Our operations, especially our manufacturing and power plants, are subject to comprehensive laws adopted for the protection of the environment and to regulate land use. The laws of primary relevance to our operations regulate the discharge of emissions into the water and air, but can also include hazardous materials handling and disposal, waste disposal and other types of environmental regulation. These laws and regulations in many cases require a lengthy and complex process of obtaining licenses, permits and approvals from the applicable regulatory agencies. Noncompliance with these laws can result in the imposition of material civil or criminal fines or penalties. We believe that we are in substantial compliance with existing environmental laws. However, no assurance can be provided that we will not become the subject of enforcement proceedings that could cause us to incur material expenditures. Further, no assurance can be provided that we will not need to incur material expenditures beyond our existing reserves to make capital improvements or operational changes necessary to allow us to comply with future environmental laws.
     With regard to the foregoing, the waste-to-energy facility operated by our CCERA project subsidiary is subject to certain revisions to New Jersey’s mercury air emission regulations. The revisions make CCERA’s mercury control requirements more stringent, especially when the last phase of the revisions becomes effective in 2012. CCERA’s management believes that the data generated during recent stack testing tends to indicate that the facility will be able to comply with even the most stringent of the regulatory revisions without installing additional control equipment. Even if the equipment had to be installed, CCERA believes that the project’s sponsor would be responsible to pay for the equipment. However, the sponsor may not have sufficient funds to do so or may assert that it is not so responsible. Estimates of the cost of installing the additional control equipment are approximately $30,000 based on our last assessment.
13. Subsequent Events
     Effective September 29, 2008, we and the requisite lenders under our domestic senior credit agreement amended the domestic senior credit agreement to (1) allow us to use cash of up to $750,000 to repurchase our outstanding common shares under our common share repurchase program, subject to certain conditions, and (2) increase the aggregate amount of permissible capital expenditures from $40,000 to $80,000 for fiscal year 2008 and $70,000 for fiscal years thereafter, subject to certain adjustments that have been reflected in the domestic senior credit agreement since its original execution in September 2006, including, among other items, an exclusion related to capital expenditures that are financed by special-purpose project debt. Please see Note 4 for a detailed listing of special-purpose project debt.
     On October 3, 2008, we acquired $19,208 of our 1999C Robbins Bonds (as defined in Note 4) for $19,016 of cash, plus accrued and unpaid interest to date. We will record a gain on the acquisition of $192 in the fiscal fourth quarter of 2008. After the acquisition, we have $1,283 of 1999C Robbins Bonds outstanding.
     Subsequent to the quarter ended September 26, 2008, pursuant to our common share repurchase program, we repurchased an aggregate of 9,233,394 common shares that settled prior to November 5, 2008 for an aggregate cost of $288,147. Cumulatively through November 5, 2008, we have repurchased 10,518,942 common shares for an aggregate cost of $338,173. We have executed the repurchases in accordance with a 10b5-1 repurchase plan as well as other open market purchases. The 10b5-1 repurchase plan allows us to purchase common shares at times when we may not otherwise do so due to regulatory or internal restrictions. Purchases under the 10b5-1 repurchase plan are based on parameters set forth in the plan.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (amounts in thousands of dollars, except share data and per share amounts)
     The following is management’s discussion and analysis of certain significant factors that have affected our financial condition and results of operations for the periods indicated below. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included in this quarterly report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended December 28, 2007, which we refer to as our 2007 Form 10-K.
Safe Harbor Statement
     This management’s discussion and analysis of financial condition and results of operations, other sections of this quarterly report on Form 10-Q and other reports and oral statements made by our representatives from time to time may contain forward-looking statements that are based on our assumptions, expectations and projections about Foster Wheeler Ltd. and the various industries within which we operate. These include statements regarding our expectations about revenues (including as expressed by our backlog), our liquidity, the outcome of litigation and legal proceedings and recoveries from customers for claims and the costs of current and future asbestos claims and the amount and timing of related insurance recoveries. Such forward-looking statements by their nature involve a degree of risk and uncertainty. We caution that a variety of factors, including but not limited to the factors described in Part I, Item 1A, “Risk Factors,” in our 2007 Form 10-K, which we filed with the SEC on February 26, 2008 and the following, could cause business conditions and our 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 oil and gas, oil refining, chemical/petrochemical and power industries;
 
    changes in the financial condition of our customers;
 
    changes in regulatory environments;
 
    changes in project design or schedules;
 
    contract cancellations;
 
    changes in our estimates of costs to complete projects;
 
    changes in trade, monetary and fiscal policies worldwide;
 
    compliance with laws and regulations relating to our global operations;
 
    currency fluctuations;
 
    war and/or terrorist attacks on facilities either owned by us or where equipment or services are or may be provided by us;
 
    interruptions to shipping lanes or other methods of transit;
 
    outcomes of pending and future litigation, including litigation regarding our liability for damages and insurance coverage for asbestos exposure;
 
    protection and validity of our patents and other intellectual property rights;
 
    increasing competition by foreign and domestic companies;
 
    compliance with our debt covenants;
 
    recoverability of claims against our customers and others by us and claims by third parties against us; and
 
    changes in estimates used in our critical accounting policies.

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     A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings and cash flows from operations. We continue to assess the impact of various U.S. federal and state legislative proposals, and modifications to existing tax treaties between the United States and foreign countries, that could result in a material increase in our U.S. federal and state taxes. The U.S. Congress has in the past considered and may in the future consider legislation affecting the tax treatment of U.S. companies that have undertaken certain types of expatriation transactions or companies’ use of or relocation to offshore jurisdictions, including Bermuda. We cannot predict whether any specific legislation will be enacted or the terms of any such legislation.
     Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us.
     In addition, this management’s discussion and analysis of financial condition and results of operations contains several statements regarding current and future general global economic conditions. These statements are based on our compilation of economic data and analyses from a variety of external sources. While we believe these statements to be reasonably accurate, global economic conditions are difficult to analyze and predict and are subject to significant uncertainty and as a result, these statements may prove to be wrong.
     We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K filed with the Securities and Exchange Commission.
Overview
     We operate through two business groups — the Global Engineering & Construction Group, which we refer to as our Global E&C Group, and our Global Power Group. In addition to these two business groups, we also report corporate center expenses and expenses related to certain legacy liabilities, such as asbestos, in the Corporate and Finance Group, which we refer to as the C&F Group.
     Since fiscal year 2007, we have been exploring strategic acquisitions within the engineering and construction industry to complement or expand on our technical capabilities or access to new market segments. During the first fiscal nine months of 2008, we acquired a U.S.-based biopharmaceutical engineering company as part of our strategy to enhance our positioning in the pharmaceutical marketplace, especially in the U.S., and acquired the majority of the assets and work force of an engineering design company, with an engineering center in Kolkata, India, which provides engineering services to the petrochemical, refining, upstream oil and gas, and power industries. We are also exploring acquisitions within the power industry to complement our product offering. However, there is no assurance that we will consummate acquisitions in the future.
Results for the Fiscal Third Quarter and First Nine Months of 2008
     We had net income of $127,900 in the fiscal third quarter of 2008, compared to net income of $129,100 in the comparable period in fiscal year 2007. Net income for the fiscal third quarter of 2008, compared to the corresponding period of 2007, was favorably impacted by the following:
    An increase to contract profit of $31,300 in the fiscal third quarter of 2008, resulting from the continued strong performance of our Global E&C Group and improved performance of our Global Power Group.
 
    A reduction in our effective tax rate during the fiscal third quarter of 2008, compared to the corresponding period in 2007.
     These increases were offset by the following:
    A net reduction to net income of $10,400 attributable to a net asbestos-related provision of $1,800 in the fiscal third quarter of 2008, as compared to a net asbestos-related gain of $8,600 in the fiscal third quarter of 2007.

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    A decrease in our share of equity earnings in certain of our equity interest projects of $17,800 for the fiscal third quarter of 2008, compared to the corresponding period of 2007.
 
    An increase in selling, general and administrative expenses of $12,100 during the fiscal third quarter of 2008, compared to the corresponding period in 2007.
 
    A $14,400 gain related to favorable resolution of project claims in the fiscal third quarter of 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.
     For the first fiscal nine months of 2008, we had net income of $426,700 compared to net income of $315,800 in the comparable period in fiscal year 2007. The increase in net income for the fiscal nine months ended September 26, 2008, compared to the corresponding period of 2007, resulted primarily from the following:
    Increased contract profit of $118,100 resulting from the sharply improved performance by our Global Power Group and continued strong operating performance by our Global E&C Group. This contract profit increase included a $7,500 commitment fee received in the fiscal nine months ended September 26, 2008 for a contract that our Global Power Group was not awarded. Additionally, the contract profit increase includes the impact to contract profit in the fiscal nine months ended September 28, 2007 for a charge of $30,000 on a legacy project in our Global Power Group. Please refer to Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information.
 
    A net increase to net income of $22,100 attributable to a net asbestos-related gain of $30,700 in the fiscal nine months ended September 26, 2008, as compared to a net asbestos-related gain of $8,600 in the fiscal nine months ended September 28, 2007.
 
    A reduction in our effective tax rate during the first fiscal nine months of 2008, compared to the corresponding period in 2007.
     These increases were offset in part by the following:
    An increase in selling, general and administrative expenses of $38,700 during the first fiscal nine months of 2008, compared to the corresponding period in 2007.
 
    A $14,400 gain in our Global Power Group related to favorable resolution of project claims in the fiscal nine months ended September 28, 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.
     Additional highlights included the following:
    Our consolidated operating revenues increased 32% to $1,718,400 in the fiscal third quarter of 2008, as compared to $1,299,900 in the fiscal third quarter of 2007, and increased 43% to $5,215,100 in the fiscal nine months ended September 26, 2008, as compared to $3,641,800 in the fiscal nine months ended September 28, 2007. These increases in operating revenues in both the fiscal quarter and nine months ended September 26, 2008 reflect increased flow-through revenues and greater business activity in both our Global E&C Group and our Global Power Group.
 
    Our consolidated new orders, measured in terms of future revenues, were $1,390,300 in the fiscal third quarter of 2008, as compared to $840,500 in the fiscal second quarter of 2008 and $1,878,500 in the fiscal third quarter of 2007.
 
    Our consolidated backlog of unfilled orders, measured in future revenues, as of September 26, 2008 was $7,262,200, as compared to $8,172,800 as of June 27, 2008 and $6,273,100 as of September 28, 2007.
 
    Our consolidated backlog, measured in terms of Foster Wheeler scope (as defined in the section entitled “—Backlog and New Orders” within this Item 2), as of September 26, 2008, was $3,193,400, as compared to $3,323,300 as of June 27, 2008 and $3,011,600 as of September 28, 2007.

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    E&C man-hours in backlog (in thousands) as of September 26, 2008 were 14,400, as compared to 13,500 as of June 27, 2008 and 13,300 as of September 28, 2007.
Challenges and Drivers
     Our primary operating focus continues to be booking quality new business and executing our contracts well. The global markets in which we operate are largely dependent on overall economic growth and the resultant demand for oil and gas, electric power, petrochemicals and refined products.
     In our Global E&C business, long-term demand is forecasted to be strong for the end products produced by our clients, and is expected to continue to stimulate investment by our clients in new and expanded plants. Therefore, attracting and retaining qualified technical personnel to execute the existing backlog of unfilled orders and future bookings will continue to be a management priority. Equally important is ensuring that we maintain an appropriate management infrastructure to integrate and manage the technical personnel. We believe the primary drivers and constraints in our Global E&C market are: global economic growth, our clients’ long-term view of oil and natural gas prices and end product demand, and scope and timing of client investments. See “—Results of Operations-Business Segments-Global E&C Group-Overview of Segment” below for a more detailed discussion of the challenges and drivers that impact our Global E&C Group, including our view of the current global economic outlook.
     In our Global Power Group business, we believe the primary drivers and constraints in the global steam generator market are: economic growth, power plant price inflation, concern related to greenhouse gas emissions, entry into new geographic markets, impact of environmental regulation, and capacity constraints of electricity markets. These drivers differ across world regions, countries and provinces. See “—Results of Operations-Business Segments-Global Power Group-Overview of Segment” below for a more detailed discussion of the challenges and drivers that impact our Global Power Group, including our view of current global economic outlook.
New Orders
     The Global E&C Group’s new orders, measured in future revenues, increased to $955,200 in the fiscal third quarter of 2008 as compared to $646,300 in the fiscal second quarter of 2008 and decreased as compared to $1,572,000 in the fiscal third quarter of 2007. These new orders are inclusive of estimated flow-through revenues, as defined below, of $290,900, $108,300 and $874,200 for the fiscal third quarter of 2008, fiscal second quarter of 2008 and fiscal third quarter of 2007, respectively. We expect capital investments and therefore the demand for our services and equipment in the markets served by our Global E&C Group, including the chemical, petrochemical, oil refining, liquefied natural gas, which we refer to as LNG, and upstream oil and gas industries, to be strong in the longer term but there is uncertainty in the market outlook in the near to medium term regarding the timing of new projects.
     The Global Power Group’s new orders increased to $435,100 in the fiscal third quarter of 2008, as compared to $194,200 in the fiscal second quarter of 2008 and $306,500 in the fiscal third quarter of 2007. Although new orders increased as compared to the fiscal second quarter of 2008, our new orders in fiscal year 2008 are impacted by the delays we have seen in the North American power markets that we serve, as well as, instances of schedule slippage in some of the European power markets that we serve.
Results of Operations:
Operating Revenues:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 1,718,355     $ 1,299,872     $ 418,483       32.2 %
Fiscal nine months ended
  $ 5,215,101     $ 3,641,760     $ 1,573,341       43.2 %
     The composition of our operating revenues varies from period to period based on the portfolio of contracts in execution during any given period. Our operating revenues are therefore dependent on our portfolio of contracts, the strength of the various geographic markets and industries we serve and our ability to address those markets and industries.

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     The increases in operating revenues in the fiscal third quarter and nine months ended September 26, 2008, compared to the corresponding periods of fiscal year 2007, were driven by our Global E&C Group, which experienced increases in operating revenues of $336,000 and $1,301,300, respectively, representing 80% and 83%, respectively, of the increases in consolidated operating revenues for each period. The increases in operating revenues are the result of our Global E&C Group’s success in meeting the strong market demand in the oil and gas, petrochemical and refining industries that stimulated investment by our customers. In the fiscal third quarter and nine months ended September 26, 2008, our Global E&C Group operating revenues from these three industries increased by $379,200 and $1,424,700, respectively, while operating revenues from the other industries we serve declined by $43,200 and $123,400, respectively. Please refer to the section entitled, “—Business Segments” within this Item 2 for a discussion of our view of the outlook for the oil and gas, petrochemical and refining industries.
     The increases in our Global E&C Group’s operating revenues during the fiscal third quarter and nine months ended September 26, 2008, were driven by the execution of projects located in Asia (increases of $171,700, or 90%, and $491,600, or 96%, respectively), Australia, New Zealand and the Pacific islands, which we refer to as Australasia (increases of $233,900, or 145%, and $726,700, or 134%, respectively) and Europe (increases of $45,700, or 25%, and $123,200, or 23%, respectively).
     Our Global E&C Group’s operating revenues in the fiscal third quarter and nine months ended September 26, 2008, included $650,000 and $2,228,700, respectively, of flow-through revenues. Flow-through revenues increased by $220,100 and $1,136,500, respectively from fiscal year 2007, representing 66% and 87%, respectively, of the increase in our Global E&C Group’s operating revenues and 53% and 72%, respectively, of the increase in consolidated operating revenues. Flow-through revenues and costs result when we purchase materials, equipment or subcontractor services on behalf of our customer on a reimbursable basis with no profit on the materials, equipment or subcontractor services and which we have the overall responsibility as the contractor for the engineering specifications and procurement or procurement services for the materials, equipment or subcontractor services included in flow-through costs. Although flow-through revenues and costs do not impact contract profit or net earnings, increased amounts of flow-through revenues have the effect of reducing our reported contract profit margins as a percent of operating revenues.
     Our Global Power Group, which predominantly serves the power generation industry, contributed $82,500, or 20%, and $272,000, or 17%, to the increase in consolidated operating revenues in the fiscal third quarter and nine months ended September 26, 2008, respectively. The increase in operating revenues in our Global Power Group is primarily attributable to the execution of projects located in Europe, North America and South America.
     Please refer to the section entitled “—Business Segments” within this Item 2 for further information.
Contract Profit:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 229,260     $ 197,960     $ 31,300       15.8 %
Fiscal nine months ended
  $ 692,447     $ 574,318     $ 118,129       20.6 %
     Contract profit is computed as operating revenues less cost of operating revenues.
     The increase in contract profit for the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, was driven primarily by increased volumes of business in our Global E&C Group. Our Global E&C Group experienced sustained contract profit margins, excluding the impact on contract profit margins of flow-through revenues, in the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, which had minimal impact on the increase in contract profit generated by the increased volumes of business in our Global E&C Group. Our Global Power Group experienced increased volumes of business executed at improved contract profit margins in the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, excluding a $9,600 gain related to the favorable resolution of project claims in the fiscal third quarter of 2007. Please refer to the section entitled “—Business Segments” within this Item 2 for further information.

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     The increase in contract profit for the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, was driven primarily by increased volumes of business in our Global E&C Group. Our Global E&C Group experienced decreased contract profit margins, excluding the impact on contract profit margins of flow-through revenues, in the nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, which partially offset the increase in contract profit generated by the increased volumes of business in our Global E&C Group. Our Global Power Group experienced increased volumes of business in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007. The contract profit in our Global Power Group in the fiscal nine months ended September 26, 2008 was positively impacted in the nine months ended September 26, 2008 by a $7,500 commitment fee that our Global Power Group received on a contract that we were not awarded. The contract profit in our Global Power Group in the fiscal nine months ended September 28, 2007 was negatively impacted by a $30,000 charge on a legacy project as described in Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q and was positively impacted by $9,600 resulting from the favorable resolution of project claims. Our Global Power Group experienced increased contract profit margins in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, excluding the above noted items. Please refer to the section entitled “—Business Segments” within this Item 2 for further information.

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Selling, General and Administrative (SG&A) Expenses:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 74,831     $ 62,686     $ 12,145       19.4 %
Fiscal nine months ended
  $ 218,771     $ 180,079     $ 38,692       21.5 %
     SG&A expenses include the costs associated with general management, sales pursuit, including proposal expenses, and research and development costs.
     The increase in SG&A expenses in the fiscal third quarter of 2008, compared to the corresponding period in fiscal year 2007, results from increases in general overhead costs of $7,100, sales pursuit costs of $4,800 and research and development costs of $300.
     The increase in SG&A expenses in the first fiscal nine months of 2008, compared to the corresponding period in fiscal year 2007, results from increases in general overhead costs of $22,900, sales pursuit costs of $15,000 and research and development costs of $800. The general overhead costs increase includes $600 in our Global Power Group related to the settlement of pension obligations for certain former employees in Canada. Please refer to Note 5 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information.
     The increases in general overhead and sales pursuit costs in the fiscal third quarter and nine months ended September 26, 2008, result primarily from the increased volume of business in the first fiscal nine months of 2008, which drove an increase in the number of non-technical support staff and related costs in the fiscal year 2008 periods compared to the corresponding periods in fiscal year 2007.
Other Income, net:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ (1,178 )   $ 22,319     $ (23,497 )     (105.3 )%
Fiscal nine months ended
  $ 36,995     $ 43,730     $ (6,735 )     (15.4 )%
     Other income, net in the fiscal third quarter of 2008 consisted primarily of $2,700 in equity earnings generated from our ownership interests, in build, own and operate projects in Italy and Chile, and $(4,500) of foreign exchange losses. Our share of equity earnings in certain of our projects in Italy were unfavorably impacted by $5,800, of which $5,500 related to periods prior to the fiscal third quarter of 2008, as a result of a change in tax rates as it relates to those projects.
     Other income, net in the fiscal third quarter of 2007 consisted primarily of $20,500 in equity earnings generated from our investments, primarily from our ownership interests, in build, own and operate projects in Italy and Chile.
     Other income, net in the first fiscal nine months of 2008 consisted primarily of $28,000 in equity earnings generated from our ownership interests, in build, own and operate projects in Italy and Chile, $2,000 of foreign exchange gains and a $1,600 gain from an insurance settlement. Our share of equity earnings in certain of our projects in Italy were favorably impacted by $8,200, of which $3,400 related to reporting periods prior to the first fiscal nine months of 2008, as a result of a recently enacted regulatory ruling that provides for reimbursement of costs associated with emission rights. Our share of equity earnings in certain of our projects in Italy were unfavorably impacted by $5,800, as a result of a change in tax rates as it relates to those projects. In addition, our share of equity earnings in our project in Chile increased by $2,200 due in large part to an increase in electric tariff rates when compared to the fiscal year 2007 average electric tariff rates.
     Other income, net in the first fiscal nine months of 2007 consisted primarily of $31,600 in equity earnings generated from our ownership interests, in build, own and operate projects in Italy and Chile and a $6,600 gain on a real estate investment.

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Other Deductions, net:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 8,986     $ 7,672     $ 1,314       17.1 %
Fiscal nine months ended
  $ 27,080     $ 33,075     $ (5,995 )     (18.1 )%
     Other deductions, net in the fiscal third quarter of 2008 consisted primarily of $4,300 of legal fees, $1,200 of bank fees, a $2,200 impairment charge related to a 15% owned investment in a power project development in Italy carried at cost and a $800 loss on the sale of fixed assets, partially offset by a net $(200) reduction in tax penalties, which reflects the reversal of $(500) of previously accrued tax penalties which were ultimately not assessed.
     Other deductions, net in the fiscal third quarter of 2007 consisted primarily of $800 of bank fees, $3,800 of legal fees, which includes $(800) of reimbursed fees related to the favorable resolution of project claims, $200 of consulting fees, $1,200 of tax penalties and a $500 provision for dispute resolution and environmental remediation costs.
     Other deductions, net in the first fiscal nine months of 2008 consisted primarily of $16,900 of legal fees, $3,400 of bank fees, a $1,800 provision for dispute resolution and environmental remediation costs, $1,100 of consulting fees, a $2,200 impairment charge related to a 15% owned investment in a power project development in Italy carried at cost and a $800 loss on the sale of fixed assets, partially offset by a net reduction in tax penalties of $(1,900), which includes the reversal of $(3,500) of previously accrued tax penalties which were ultimately not assessed.
     Other deductions, net in the first fiscal nine months of 2007 consisted primarily of $2,500 of bank fees, $13,300 of legal fees, which includes $(800) of reimbursed fees related to the favorable resolution of project claims, $400 of consulting fees, $1,700 of tax penalties and a $9,700 provision for dispute resolution and environmental remediation costs.
Interest Income:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 12,457     $ 12,467     $ (10 )     (0.1 )%
Fiscal nine months ended
  $ 35,155     $ 24,263     $ 10,892       44.9 %
     The decrease in interest income in the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, was driven primarily by $4,000 in interest income recognized in the fiscal third quarter of 2007 related to the favorable resolution of project claims, partially offset by increased interest income in the fiscal third quarter of 2008 which was primarily driven by higher average cash and cash equivalents balances.
     The increase in interest income in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, was driven primarily by higher average cash and cash equivalents balances, partially offset by $4,000 in interest income recognized in the fiscal nine months ended September 28, 2007 related to the favorable resolution of project claims.
Interest Expense:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 5,193     $ 4,716     $ 477       10.1 %
Fiscal nine months ended
  $ 16,204     $ 14,652     $ 1,552       10.6 %
     The increase in interest expense in the fiscal third quarter and first fiscal nine months of 2008, compared to the corresponding periods of fiscal year 2007, resulted from the increased borrowings under our FW Power S.r.L. special-purpose limited recourse project debt as we continue construction of the electric power generating wind farm projects in Italy.

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Minority Interest in Income of Consolidated Affiliates:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 834     $ 1,765     $ (931 )     (52.7 )%
Fiscal nine months ended
  $ 1,859     $ 5,038     $ (3,179 )     (63.1 )%
     Minority interest in income of consolidated affiliates represents third-party ownership interests in the results of our Global Power Group’s Martinez, California gas-fired cogeneration facility and our manufacturing facilities in Poland and the People’s Republic of China. The change in minority interest in income of consolidated affiliates is based upon changes in the underlying earnings of the subsidiaries. The decrease in minority interest in income of consolidated affiliates in the fiscal third quarter and first nine months of 2008, compared to the corresponding periods in fiscal year 2007, primarily resulted from decreased earnings from the Martinez, California facility mainly driven by higher natural gas pricing, which was partially offset by increased electricity sales and plant optimization in off-peak hours.
Net Asbestos-Related Gain/(Provision):
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ (1,725 )   $ 8,633     $ (10,358 )     (120.0 )%
Fiscal nine months ended
  $ 30,738     $ 8,633     $ 22,105       256.1 %
     Net asbestos-related expense in the fiscal third quarter of 2008 resulted from an expense of $1,800 on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.
     Net asbestos-related gain in the fiscal nine months ended September 26, 2008 resulted from a gain of $35,900 associated with settlement agreements that our subsidiaries reached with two additional insurers, partially offset by an expense of $5,200 on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.
     Net asbestos-related gain in the fiscal third quarter and fiscal nine months ended September 28, 2007, resulted from a gain of $8,600 associated with settlement agreements that our subsidiaries reached with two insurers.
     Please refer to Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information.

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Provision for Income Taxes:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 21,050     $ 35,439     $ (14,389 )     (40.6 )%
Fiscal nine months ended
  $ 104,683     $ 102,324     $ 2,359       2.3 %
     The tax provision for each year-to-date period is calculated by multiplying pre-tax income by the estimated annual effective tax rate for such period. Our effective tax rate can fluctuate significantly from period to period and may differ significantly from the U.S. federal statutory rate as a result of income taxed in various foreign jurisdictions with rates different from the U.S. statutory rate and also as a result of our inability to recognize a tax benefit for losses generated by certain unprofitable operations. In addition, Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” requires us to reduce our deferred tax benefits by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of losses (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pretax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate.
     Our effective tax rate is, therefore, dependent on the location and amount of our taxable earnings and the effects of changes in valuation allowances. Our effective tax rates for the fiscal quarter and nine months ended September 26, 2008 and September 28, 2007 were lower than the U.S. statutory rate of 35% due principally to:
    Income earned in tax jurisdictions with tax rates lower than the U.S. statutory rate, which is expected to contribute to an approximate twelve-percentage point reduction in the effective tax rate for the full year 2008; and
 
    A valuation allowance decrease which is expected to contribute to an approximate six-percentage point reduction in the effective tax rate for the full year 2008. A decrease in our valuation allowance occurred in the fiscal quarter and nine months ended September 26, 2008 because we recognized earnings in jurisdictions where we continue to maintain a full valuation allowance (primarily the United States and Finland).
     These factors which reduce the effective tax rate were partially offset by our inability to recognize a tax benefit for losses subject to valuation allowance in certain other jurisdictions and other permanent differences.
     We monitor the jurisdictions for which valuation allowances against deferred tax assets were established in previous years. As we currently have positive earnings in most jurisdictions, we evaluate, on a quarterly basis, the need for the valuation allowances against deferred tax assets in those jurisdictions. Such evaluation includes a review of all available evidence, both positive and negative, in determining whether a valuation allowance is necessary. If the trend for positive earnings continues in those jurisdictions where we have recorded a valuation allowance (primarily the United States and Finland), we may conclude that a valuation allowance is no longer needed in either or both jurisdictions.
     For statutory purposes, the majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until 2024 and beyond, based on current tax laws.
EBITDA:
                                 
    September 26,   September 28,        
    2008   2007   $ Change   % Change
Fiscal quarter ended
  $ 165,243     $ 178,977     $ (13,734 )     (7.7 )%
Fiscal nine months ended
  $ 580,991     $ 459,872     $ 121,119       26.3 %
     The decline in EBITDA for the fiscal third quarter of 2008, compared to the corresponding period of 2007, resulted primarily from the following:
    A net asbestos-related provision of $1,800 in our C&F Group in the fiscal third quarter of 2008, as compared to a net asbestos-related gain of $8,600 in our C&F Group in the fiscal third quarter of 2007.

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    A decrease in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $5,800, of which $5,500 related to periods prior to the fiscal third quarter of 2008, as a result of a change in tax rates as it relates to those projects.
 
    A $2,200 impairment charge in our Global E&C Group in the fiscal third quarter of 2008 related to a 15% owned investment in a power project development in Italy carried at cost.
 
    A $14,400 gain in our Global Power Group related to favorable resolution of project claims in the fiscal third quarter of 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.
     These declines were offset in part by increased volumes of business, strong operating performance and increased contract profit margins in our Global Power Group and sustained contract profit margins in our Global E&C Group in the fiscal third quarter of 2008, as compared to the corresponding period of 2007. Please refer to the section entitled “—Contract Profit” above for further discussion of contract profit margins.
     The increase in EBITDA for the fiscal nine months ended September 26, 2008, compared to the corresponding period of 2007, resulted primarily from the following:
    Increased volumes of business, strong operating performance and increased contract profit margins in our Global Power Group in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of 2007. Please refer to the section entitled “—Contract Profit” above for further discussion on contract profit margins.
 
    A net asbestos-related gain of $30,700 in our C&F Group in the fiscal nine months ended September 26, 2008, as compared to a net asbestos-related gain of $8,600 in our C&F Group in the fiscal nine months ended September 28, 2007.
 
    An increase in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $8,200 in the fiscal nine months ended September 26, 2008, of which $3,400 related to reporting periods prior to the fiscal nine months ended September 26, 2008, as a result of a recently enacted regulatory ruling that provides for reimbursement of costs associated with emission rights.
 
    A $7,500 commitment fee received in the fiscal nine months ended September 26, 2008 for a contract that our Global Power Group was not awarded.
 
    An increase of $2,200 in our share of equity earnings from one of our Global Power Group’s equity interest investments during the fiscal nine months ended September 26, 2008, due primarily to an increase in electric tariff rates in Chile when compared to the fiscal year 2007 average electric tariff rates.
 
    A charge of $30,000 on a legacy project in our Global Power Group incurred during the fiscal nine months ended September 28, 2007. Please refer to Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information.
     These increases were offset in part by the following:
    A decrease in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $5,800 during the fiscal nine months ended September 26, 2008, as a result of a change in tax rates as it relates to those projects.
 
    A $2,200 impairment charge in our Global E&C Group in the fiscal nine months ended September 26, 2008 related to a 15% owned investment in a power project development in Italy carried at cost.
 
    A $14,400 gain in our Global Power Group related to favorable resolution of project claims in the fiscal nine months ended September 28, 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.
     See the individual segment explanations below for additional details.

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     EBITDA is a supplemental financial measure not defined in generally accepted accounting principles, or GAAP. We define EBITDA as income before interest expense, income taxes, depreciation and amortization. We have presented EBITDA because we believe it is an important supplemental measure of operating performance. EBITDA, after adjustment for certain unusual and infrequent items specifically excluded in the terms of our current and prior senior credit agreements, is used for certain covenants under our current and prior senior credit agreements. We believe that the line item on the condensed consolidated statements of operations and comprehensive income entitled “net income” is the most directly comparable GAAP financial measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or any other GAAP financial measure. EBITDA, as calculated by us, may not be comparable to similarly titled measures employed by other companies. In addition, this measure does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. As EBITDA excludes certain financial information that is included in net income, users of this financial information should consider the type of events and transactions that are excluded. Our non-GAAP performance measure, EBITDA, has certain material limitations as follows:
    It does not include interest expense. Because we have borrowed money to finance some of our operations, interest is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations;
 
    It does not include taxes. Because the payment of taxes is a necessary and ongoing part of our operations, any measure that excludes taxes has material limitations; and
 
    It does not include depreciation and amortization. Because we must utilize property, plant and equipment and intangible assets in order to generate revenues in our operations, depreciation and amortization are necessary and ongoing costs of our operations. Therefore, any measure that excludes depreciation and amortization has material limitations.
     A reconciliation of EBITDA to net income is shown below.

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            Global     Global     C&F  
    Total     E&C Group     Power Group     Group (1)  
Fiscal quarter ended September 26, 2008
                               
EBITDA (2)
  $ 165,243     $ 122,828     $ 64,753     $ (22,338 )
 
                         
Less: Interest expense
    (5,193 )                        
Less: Depreciation and amortization
    (11,080 )                        
 
                             
Income before income taxes
    148,970                          
Provision for income taxes
    (21,050 )                        
 
                             
Net income
  $ 127,920                          
 
                             
 
                               
Fiscal quarter ended September 28, 2007
                               
EBITDA (3)
  $ 178,977     $ 129,232     $ 58,390     $ (8,645 )
 
                         
Less: Interest expense
    (4,716 )                        
Less: Depreciation and amortization
    (9,721 )                        
 
                             
Income before income taxes
    164,540                          
Provision for income taxes
    (35,439 )                        
 
                             
Net income
  $ 129,101                          
 
                             
 
                               
Fiscal nine months ended September 26, 2008
                               
EBITDA (4)
  $ 580,991     $ 412,976     $ 197,547     $ (29,532 )
 
                         
Less: Interest expense
    (16,204 )                        
Less: Depreciation and amortization
    (33,366 )                        
 
                             
Income before income taxes
    531,421                          
Provision for income taxes
    (104,683 )                        
 
                             
Net income
  $ 426,738                          
 
                             
 
                               
Fiscal nine months ended September 28, 2007
                               
EBITDA (5)
  $ 459,872     $ 395,364     $ 99,780     $ (35,272 )
 
                         
Less: Interest expense
    (14,652 )                        
Less: Depreciation and amortization
    (27,120 )                        
 
                             
Income before income taxes
    418,100                          
Provision for income taxes
    (102,324 )                        
 
                             
Net income
  $ 315,776                          
 
                             
 
(1)   Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest.
 
(2)   Includes in the fiscal quarter ended September 26, 2008: increased/(decreased) contract profit of $9,100 from the regular re-evaluation of final estimated contract profits*: $12,700 in our Global E&C Group and $(3,600) in our Global Power Group; and a charge of $1,800 in our C&F Group on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.
 
(3)   Includes in the fiscal quarter ended September 28, 2007: increased contract profit of $18,000 from the regular re-evaluation of final estimated contract profits*: $10,800 in our Global E&C Group and $7,200 in our Global Power Group; and a gain of $8,600 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers.
 
(4)   Includes in the fiscal nine months ended September 26, 2008: increased/(decreased) contract profit of $26,100 from the regular re-evaluation of final estimated contract profits*: $35,800 in our Global E&C Group and $(9,700) in our Global Power Group; a gain of $35,900 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers; and a charge of $5,200 in our C&F Group on the revaluation of our asbestos liability and related asset resulting from our rolling 15-year asbestos liability estimate.
 
(5)   Includes in the fiscal nine months ended September 28, 2007: increased/(decreased) contract profit of $34,100 from the regular re-evaluation of final estimated contract profits*: $50,500 in our Global E&C Group and $(16,400) in our Global Power Group; and a gain of $8,600 in our C&F Group on the settlement of coverage litigation with two asbestos insurance carriers.

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*   Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information regarding changes in our final estimated contract profits.
     The accounting policies of our business segments are the same as those described in our summary of significant accounting policies. The only significant intersegment transactions relate to interest on intercompany balances. We account for interest on those arrangements as if they were third party transactions—i.e. at current market rates, and we include the elimination of that activity in the results of the C&F Group.
Business Segments
     EBITDA, as discussed and defined above, is the primary measure of operating performance used by our chief operating decision maker.
Global E&C Group
                                                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,                     September 26,     September 28,              
    2008     2007     $ Change     % Change     2008     2007     $ Change     % Change  
Operating revenues
  $ 1,287,405     $ 951,402     $ 336,003       35.3 %   $ 3,928,136     $ 2,626,816     $ 1,301,320       49.5 %
 
                                               
EBITDA
  $ 122,828     $ 129,232     $ (6,404 )     (5.0 )%   $ 412,976     $ 395,364     $ 17,612       4.5 %
 
                                               
Results
     The increases in operating revenues in the fiscal third quarter and nine months ended September 26, 2008, as compared to the corresponding periods of fiscal year 2007, reflect increased volumes of work and flow-through revenues as a result of our Global E&C Group’s success in meeting the strong market demand in the oil and gas, petrochemical and refining industries that stimulated investment by our customers. In the fiscal third quarter and nine months ended September 26, 2008, our Global E&C Group’s operating revenues from these three industries increased by $379,200 and $1,424,700, respectively, while operating revenues from the other industries we serve declined by $43,200 and $123,400, respectively.
     The increases in our Global E&C Group’s operating revenues during the fiscal third quarter and nine months ended September 26, 2008, were driven by the execution of projects located in Asia (increases of $171,700, or 90%, and $491,600, or 96%, respectively), Australasia (increases of $233,900, or 145%, and $726,700, or 134%, respectively), and Europe (increases of $45,700, or 25%, and $123,200, or 23%, respectively). Please refer to the section entitled “—Overview of Segment” below for our view of the outlook for the oil and gas, petrochemical and refining industries.
     Our Global E&C Group’s operating revenues in the fiscal third quarter and nine months ended September 26, 2008 included $650,000 and $2,228,700, respectively, of flow-through revenues. Flow-through revenues in the fiscal third quarter and nine months ended September 26, 2008 increased by $220,100 and $1,136,500, respectively, from the corresponding periods of fiscal year 2007, representing 66% and 87%, respectively, of the increase in our Global E&C Group’s operating revenues. As discussed above, although flow-through revenues and costs do not impact contract profit or net earnings, increased amounts of flow-through revenues have the effect of reducing our reported contract profit margins as a percent of operating revenues.
     The decrease in our Global E&C Group’s EBITDA in the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, resulted primarily from the following:
    A decrease in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $5,800, of which $5,500 related to periods prior to the fiscal third quarter of 2008, as a result of a change in tax rates as it relates to those projects.
 
    A $2,200 impairment charge in our Global E&C Group in the fiscal third quarter of 2008 related to a 15% owned investment in a power project development in Italy carried at cost.
 
    Foreign exchange losses of $6,100 in the fiscal third quarter of 2008, compared to foreign exchange gains of $6,000 recognized in prior quarters of 2008 and compared to foreign exchange losses of $600 recognized in the fiscal third quarter of 2007.

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     These decreases were offset in part by increased volumes of business, strong operating performance and sustained contract profit margins in our Global E&C Group in the fiscal third quarter of 2008, as compared to the corresponding period of 2007.
     The increase in our Global E&C Group’s EBITDA in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, resulted primarily from the following:
    Increased volumes of business due to the strength of the industries served and sustained demand for our products and services in the geographic markets served. This demand is discussed further in the section “—Overview of Segment” below.
 
    An increase in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $8,200 during the fiscal nine months ended September 26, 2008, of which $3,400 related to reporting periods prior to the fiscal nine months ended September 26, 2008, as a result of a recently enacted regulatory ruling that provides for reimbursement of costs associated with emission rights.
     These increases were offset in part by the following:
    Decreased contract profit margins, excluding the impact on contract profit margins of flow-through revenues, in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007.
 
    A decrease in our share of equity earnings in certain of our Global E&C Group’s projects in Italy of $5,800 during the fiscal nine months ended September 26, 2008, as a result of a change in tax rates as it relates to those projects.
 
    A $2,200 impairment charge in our Global E&C Group in the fiscal nine months ended September 26, 2008 related to a 15% owned investment in a power project development in Italy carried at cost.
     Overview of Segment
     Our Global E&C Group, which operates worldwide, designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related infrastructure, including power generation and distribution facilities, and gasification facilities. Our Global E&C Group is also involved in the design of facilities in new or developing market sectors, including carbon capture and storage, solid fuel-fired integrated gasification combined-cycle power plants, coal-to-liquids, coal-to-chemicals and biofuels. Our Global E&C Group generates revenues from engineering and construction activities pursuant to contracts spanning up to approximately four years in duration and from returns on its equity investments in various power production facilities.
     Our Global E&C Group owns one of the leading technologies used in refinery residue upgrading and a hydrogen production process used in oil refineries and petrochemical plants. Additionally, our Global E&C Group has experience with, and is able to work with, a wide range of processes owned by others.
     Below is an overview of the primary drivers and constraints applicable to our Global E&C Group.
     Demand for Oil and Gas, Petrochemicals and Refined Products and Global Economic Outlook
     We expect investment in new oil and gas, refining and petrochemicals/chemicals facilities, and modernization, expansion and upgrading of existing facilities in these sectors, to continue to be robust in the longer term although there is uncertainty in the near to medium term regarding the timing of new projects.
     Our business has not been significantly impacted to date by the global credit market crisis, however, the possibility exists that credit conditions, as well as the slowdown in global economic growth, could materially adversely affect the industries in which our clients operate and as a result, our Global E&C Group’s business.

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     We believe that the overall global refining system is still running at high utilization rates and that global demand for many refined products, particularly middle distillates (diesel, jet fuel, and heating oil), will continue to grow. We believe that refining capacity will therefore continue to be added through the development of grassroots refineries, notably in the Middle East and Asia. Significant upgrades and expansions also continue to be planned or are underway at existing refineries in many regions. Clean fuel programs are also being implemented to meet tighter fuel specifications in refiners’ domestic and/or export markets. We are currently working on refinery projects in the Americas, Europe, Asia and the Middle East.
     Some refiners are also investing in refinery/petrochemical integration. We believe that the drivers for this investment include: adding value to their refinery streams, diversification of their production, and margin enhancement. We are working on a number of integrated refinery/petrochemical projects in Asia and the Middle East.
     The price differentials between heavier, higher-sulfur crude oil and lighter, sweeter crudes remain at a sufficient level to continue to stimulate refinery investment in facilities which enable refiners to process the cheaper, higher-sulfur crudes instead of the lighter, more expensive crudes, or to upgrade their lower-value refinery residues to higher-value transportation fuels, for which demand continues to grow. We expect to see continued investment in these projects.
     We have considerable experience and expertise in this area, including our proprietary delayed coking technology, which enables refineries to upgrade lower quality crude oil or refinery residue to high value refined products such as transportation fuels. We are currently executing a significant number of delayed coking projects, including:
    Feasibility studies;
 
    Delayed coking technology license agreements and process design packages;
 
    Front-end engineering and design, or FEED, contracts;
 
    Engineering, procurement and construction supervision contracts; and
 
    Full engineering, procurement and construction contracts.
     These projects are located in Asia, Europe, the Middle East, North America, and South America. The subsequent phases of some of these projects for which we are working on the early phases, offer us further opportunities. We believe further coking opportunities exist in regions such as the Americas, where coking is a well-established residue upgrading route, and in regions such as Asia which are now looking at residue upgrading as an option, but where investment in residue upgrading has not previously been a prime focus for refiners.

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     Investment in Petrochemical Plants
     Investment in petrochemical plants began to rise sharply in 2004 in response to strong growth in demand for petrochemicals. The majority of this investment has been centered in Asia and the Middle East. We are seeing:
    Further new planned investment in Asia and the Middle East;
 
    Investment in specialty chemicals, particularly in the Middle East, stimulated by governmental desire to further diversify their economies to lessen their dependence on crude oil exports and to provide sustained employment for their growing young populations; and
 
    Increasing interest in developing new chemical facilities and expanding existing plants in other locations including North Africa, the Commonwealth of Independent States and South America.
     Client Expectation for Oil and Natural Gas Prices
     We believe that our clients’ long-term expectation for sustained oil prices, together with longer-term projections for robust growth in global oil and gas demand, provide a strong stimulus to clients to invest in upstream oil and gas facilities, including LNG production, in Africa, the Americas, Asia, Australasia, the Commonwealth of Independent States and Caspian region and the Middle East.
     We believe that rising demand for natural gas in Europe, Asia and the United States, combined with a shortfall in indigenous production, and a desire for flexibility and/or security of gas supply, will continue to act as a stimulant to the LNG business. Although LNG demand continues to grow strongly, the pace at which new liquefaction train construction projects have received approval to proceed has slowed over the last two or three years. We believe this indicates that significant additional liquefaction capacity over and above the approved projects will need to be developed.
     Scope and Timing of Investments in Engineering and Construction Services, Equipment and Materials
     While the longer term outlook for client investment in the oil and gas, refining and petrochemicals industries remains positive, some companies are electing to commit to only partial or staged investments, to reduce the scope of their investments, to postpone or cancel contemplated investments or to involve additional partners in their investments. As we work with our clients in the early study and front-end design phases of their projects, we are helping some of them develop a revised project that meets their investment parameters, develop a staged investment plan, or revise the scope of or configuration of their original project so that they are able to obtain approval to proceed with their investment. In addition, as discussed above, although the credit market crisis has not directly impacted our business as yet, we believe that its impact on general economic conditions appears to be deepening and becoming more widespread and the full impact has yet to be realized.
     Pharmaceutical Facility Investment
     Client investment in new pharmaceutical production facilities has slowed since 2003. We believe this is attributable to a range of factors including industry cost pressure. Investment has focused on plant rationalization, upgrading and improvement projects rather than on major new greenfield production facilities and on biotechnology facilities. In February 2008, we acquired a U.S.-based biopharmaceutical engineering company as part of our strategy to enhance our positioning in the pharmaceutical marketplace, especially in the U.S.

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Global Power Group
                                                                 
    Fiscal Quarters Ended     Fiscal Nine Months Ended  
    September 26,     September 28,                     September 26,     September 28,              
    2008     2007     $ Change     % Change     2008     2007     $ Change     % Change  
Operating revenues
  $ 430,950     $ 348,470     $ 82,480       23.7 %   $ 1,286,965     $ 1,014,944     $ 272,021       26.8 %
 
                                               
EBITDA
  $ 64,753     $ 58,390     $ 6,363       10.9 %   $ 197,547     $ 99,780     $ 97,767       98.0 %
 
                                               
     Results
     The increases in operating revenues in the fiscal third quarter and nine months ended September 26, 2008, as compared to the corresponding periods of fiscal year 2007, result from the increased volume of business in our operations in Asia, Europe, North America and South America, primarily through the execution of projects located in Asia (increases of $14,200, or 34%, and $13,500, or 10%, respectively), Europe (increases of $34,200, or 31%, and $129,000, or 43%, respectively), North America (increases of $26,500, or 15%, and $84,300, or 16%, respectively) and South America (increases of $3,000, or 15%, and $42,800, or 89%, respectively).
     The increase in our Global Power Group’s EBITDA in the fiscal third quarter of 2008, as compared to the corresponding period of fiscal year 2007, resulted primarily from the following:
    Increased volumes of business executed during the period. Refer to the section “—Overview of Segment” below for a discussion of the strength of the industries served and demand for our products and services.
 
    Increased contract profit margins experienced on our contracts executed, excluding the $9,600 gain noted below related to the favorable resolution of project claims in the fiscal third quarter of 2007.
     These increases were offset in part by a $14,400 gain in our Global Power Group related to favorable resolution of project claims in the fiscal third quarter of 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.
     The increase in our Global Power Group’s EBITDA in the fiscal nine months ended September 26, 2008, as compared to the corresponding period of fiscal year 2007, resulted primarily from the following:
    Increased volumes executed during the period. Refer to the section “—Overview of Segment” below for a discussion of the strength of the industries served and demand for our products and services.
 
    Increased contract profit margins experienced on our contracts executed, excluding the $9,600 gain noted below related to favorable resolution of project claims in the fiscal nine months ended September 28, 2007.
 
    A $7,500 commitment fee received in the fiscal nine months ended September 26, 2008 for a contract that our Global Power Group was not awarded.
 
    An increase of $2,200 in our share of equity earnings from one of our Global Power Group’s equity interest investments during the fiscal nine months ended September 26, 2008, due primarily to an increase in electric tariff rates in Chile when compared to the fiscal year 2007 average electric tariff rates.
 
    A charge of $30,000 on a legacy project in our Global Power Group incurred during the fiscal nine months ended September 28, 2007. Please refer to Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information.
     These increases were offset in part by a $14,400 gain in our Global Power Group related to favorable resolution of project claims in the fiscal nine months ended September 28, 2007. The $14,400 gain increased contract profit by $9,600 and interest income by $4,000 and reduced other deductions, net by $800.

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     Overview of Segment
     Our Global Power Group designs, manufactures and erects steam generators for electric power generating stations, district heating plants and industrial facilities worldwide. The vast majority of the global steam generator market utilizes coal as the primary fuel for the steam generator. Therefore, the market drivers and constraints associated with coal use strongly affect the steam generator market and our Global Power Group’s business. Additionally, our Global Power Group designs, manufactures and erects auxiliary equipment for electric power generating stations and industrial facilities worldwide and owns and/or operates several cogeneration, independent power production and waste-to-energy facilities, as well as power generation facilities for the process and petrochemical industries.
     Below is an overview of the primary drivers and constraints applicable to the business areas within our Global Power Group.
     Economic Growth
     Historically, demand for our steam generators and auxiliary equipment has been significantly affected by electricity demand and industrial output, which in turn has been significantly affected by economic growth. A further slowdown or recession in economic growth, in connection with the credit market crisis discussed above in the section entitled, “—Results of Operations-Business Segments-Global E&C Group-Overview of Segment,” could materially adversely affect the industries in which our clients operate and as a result, our Global Power Group’s business. In particular, we believe that both the U.S. and segments in Europe are experiencing a slowdown in economic growth that could cause a softening in demand for steam generators and, as a result, could adversely affect our Global Power Group’s business in these regions. However, we believe that economic growth in developing countries, such as China, India, Indonesia, Korea, South Africa, Turkey, Vietnam, and parts of South America and the Middle East will continue to drive strong demand for steam generators for electric power generating stations, district heating plants and industrial facilities in these countries. We also believe demand for steam generators fired or co-fired by low carbon and carbon neutral fuels will increase, as further described below.
     Power Plant Price Inflation
     Although we are starting to see some softening in commodities prices during the fiscal third quarter of 2008, we believe that the substantial price inflation experienced previously through fiscal year 2008 related to commodities and labor services for new power plants, retro-fit and related services will continue to suppress future demand for steam generators, which in turn could adversely affect our Global Power Group’s business opportunities.
     Concern Related to Greenhouse Gases
     Concern for emissions related to greenhouse gases, such as carbon dioxide, or CO2, from fossil fuel power plants, could suppress future demand for utility steam generators and in turn adversely affect our Global Power Group’s business opportunities. We believe that this concern is currently strongest in the U.S. and Europe and could adversely affect our Global Power Group’s business opportunities in these regions. We have recently experienced delays in certain North American projects we view as prospects and we believe this is a result of a combination of these market restraining factors (environmental pressure, high fossil fuel prices, high power plant prices and softening economic growth), as discussed above. We believe that concern related to greenhouse gases is not currently as strong in Africa, Asia, Latin America, Eastern Europe or the Middle East, and is not significantly suppressing the demand for utility coal-fired steam generators in these regions and that these regions continue to offer business opportunities to our Global Power Group.
     We believe our Global Power Group is well positioned to serve the global utility steam generator market with its circulating-fluidized bed, which we refer to as CFB, steam generator technology, even with continued concern related to greenhouse gases. In addition to cleanly burning a wide spectrum of coal types, CFBs can also burn biomass and recycled fuels (such as tires, demolition wood, plastics, waste paper, waste and waste coal). These fuels, in many regions, are considered to be carbon neutral or low carbon fuels, allowing owners of CFB power plants to achieve substantially lower carbon emission as compared to conventional pulverized coal, which we refer to as PC, steam generator technology. We believe power markets around the world, especially in the U.S. and in Western Europe, are valuing low carbon and carbon neutral fuels even more, driven by increased regulatory uncertainty around greenhouse gas regulation and that our CFB technology is well-positioned for this market opportunity. This is evidenced by an increase in recent awards for CFBs which either co-fire or fully fire low carbon and carbon neutral fuels, such as biomass and waste fuels.

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     We believe that concern related to greenhouse gases is driving a strong preference for supercritical once-through-units, which we refer to as OTU, steam generator technology, in nearly all world regions within the utility steam generator market. OTU steam generator technology offers higher efficiency and hence reduced CO2 emissions since the steam is produced at supercritical conditions.
     We believe our Global Power Group is well positioned to serve the supercritical OTU market as evidenced by our Global Power Group’s success in securing three projects based on supercritical OTU technology: (1) a project, awarded in fiscal year 2005 and planned to be commercially operational by fiscal year 2009, in Poland where we will be supplying the world’s first supercritical OTU CFB steam generator which will utilize advanced BENSON vertical tube technology; (2) a project, awarded in fiscal year 2007 and planned to be commercially operational by fiscal year 2011, for the design and supply, or D&S, of a supercritical OTU PC steam generator for a coal-fired generating facility located in West Virginia; and (3) a D&S project, awarded in 2008, for our second supercritical OTU CFB project which will be located in Russia and is the first CFB in that country. A key component of our strategy is to leverage these key wins to further grow our position in the supercritical utility steam generator market for both PC and CFB steam generators.
     We believe that supercritical CFB steam generator technology has the potential to further penetrate the supercritical utility steam generator market, especially for non-premium solid fuels such as biomass, lignite, brown coals and waste coals. Since we expect to be the first steam generator supplier with an operational supercritical CFB reference plant (which is expected to be commissioned in Poland in fiscal year 2009), and have recently been awarded a contract in Russia for the second supercritical CFB ordered in the world, we believe we are well positioned to pursue this market opportunity.
     Entry into New Geographic Markets
     We believe that the world’s largest utility steam generator markets will continue to be in Asia, such as China and India, offering both opportunity and challenges to our Global Power Group’s business. Historically, we believe it has been difficult for foreign companies to significantly penetrate these markets due to entrenched low-cost domestic steam generator suppliers, government controlled and owned steam generator companies, and national trade policies favoring domestic suppliers. Our Global Power Group is participating in these markets on a limited basis while growing its manufacturing and engineering operations in China to provide high quality products competitive in these regions as well as the rest of the world.
     To maximize business opportunities in these regions, our Global Power Group is augmenting our direct sales and supply chain capacity into these markets by licensing our technology to select boiler suppliers in these regions, which is increasing our market penetration through licensees.
     Impact of Environmental Regulations
     We believe that environmental regulations will continue to become more restrictive globally and that this will drive continued global demand for our Global Power Group’s environmental products and services, such as selective non-catalytic and catalytic NOx reduction systems, low NOx burners, over-fire air systems, coal/air balancing systems and coal mill upgrade equipment.
     Capacity Constraints in Electricity Markets
     We believe that the amount of unused available electric generating capacity as a percentage of total electric capacity will remain tight globally and that coal fired steam generator power plant owners and operators will continue to run these plants at historically high utilization rates. The high utilization rates are expected to increase the need for maintenance, which we believe will continue to spur overhaul and additional maintenance investment by owners and operators of these plants, especially in the U.S. and Europe, which have sizable older steam generator power plant fleets. We believe these factors are contributing to a strong demand for our Global Power Group’s steam generator aftermarket products and services.

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Liquidity and Capital Resources
     Fiscal Year-to-Date 2008 Activities
     As of September 26, 2008, we had cash and cash equivalents and restricted cash totaling $1,335,300, compared to $1,069,500 as of December 28, 2007. The increase was primarily driven by an increase in cash and cash equivalents of $260,400 which results primarily from net cash provided by operations of $407,800, partially offset by net cash used in investing activities of $84,800, net cash used in financing activities of $37,200 and unfavorable exchange rate changes on cash and cash equivalents of $25,400. Restricted cash was $26,400 and $20,900 as of September 26, 2008 and December 28, 2007, respectively. Of the $1,335,300 total of cash and cash equivalents and restricted cash as of September 26, 2008, $1,028,200 was held by our foreign subsidiaries. Please refer to Note 1 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for additional details on cash balances.
     Net cash provided by operations in the first fiscal nine months of 2008 was $407,800, compared to net cash provided by operations of $241,700 in the comparable period of fiscal year 2007. Net cash provided by operations in the first fiscal nine months of 2008 was positively impacted by our strong operating performance and net proceeds from settlements with asbestos insurers in excess of liability indemnity payments and defense costs of $21,800, partially offset by cash used for working capital activities of $53,300. The increase in cash provided by operations of $166,100 in the first fiscal nine months of 2008, compared to the corresponding period of fiscal year 2007, results primarily from an increase in net income of $111,000, a net increase in cash flows of $52,300 from asbestos settlements in excess of liability indemnity payments and defense costs (net proceeds of $21,800 in the first fiscal nine months of 2008 versus funding of $30,500 in the first fiscal nine months of 2007), partially offset by a net reduction in cash flows of $38,000 for a net increase in working capital (net decrease of $53,300 versus $15,400 in the first fiscal nine months of 2008 and 2007, respectively).
     Net cash provided by operations in the first fiscal nine months of 2007 was also positively impacted by our strong operating performance, partially offset by making $35,000 of mandatory and discretionary contributions to our domestic pension plan, funding $30,500 of asbestos liability indemnity payments and defense costs and cash used for working capital activities of $15,400.
     Our working capital varies from period to period depending on the mix, stage of completion and commercial terms and conditions of our contracts. Working capital in our Global E&C Group tends to rise as the workload of reimbursable contracts increases since services are rendered prior to billing clients while working capital tends to decrease in our Global Power Group when the workload increases as cash tends to be received prior to ordering materials and equipment. The change in working capital in the first fiscal nine months of 2008, compared to the corresponding period of fiscal year 2007, reflects an increase in working capital generated by the increase in workload experienced by our Global E&C Group, partially offset by a decrease in working capital generated by the increase in workload experienced by our Global Power Group. As more fully described below in “-Outlook,” we believe our existing cash balances and forecasted net cash provided from operating activities will be sufficient to fund our operations throughout the next 12 months. Our ability to further increase our cash flows from operating activities in future periods will depend in large part on the demand for our products and services and our operating performance in the future. Please refer to the sections entitled “-Global E&C Group-Overview of Segment” and “-Global Power Group-Overview of Segment” above for our view of the outlook for each of our business segments.

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     Net cash used in investing activities in the first fiscal nine months of 2008 was $84,800, compared to net cash used in investing activities of $30,900 in the comparable period in fiscal year 2007. The net cash used in investing activities in the first fiscal nine months of 2008 is attributable primarily to capital expenditures of $62,400 which included $19,000 of expenditures in FW Power S.r.L. as we continue construction of the electric power generating wind farm projects in Italy, an increase in restricted cash of $6,100 primarily driven by an increase in debt service funds for FW Power S.r.L. and $14,900 of net cash used for the purchase price of acquisitions, net of cash acquired. The cash used in investing activities in the first fiscal nine months of 2007 is attributable primarily to capital expenditures of $33,500 (which included $10,600 of expenditures in FW Power S.r.L., related to the construction of the electric power generating wind farm projects in Italy), an increase in restricted cash of $2,800 primarily driven by an increase in client escrow funds and an increase in debt service funds for FW Power S.r.L., a $1,500 payment to purchase a Finnish company that owns patented coal flow measuring technology and a $4,800 payment made in September 2007 related to the FW Power acquisition in fiscal year 2006, partially offset by a $6,300 return of investment from our unconsolidated affiliates and proceeds from the sale of assets of $6,700. The capital expenditures in both fiscal years related primarily to project construction (including the FW Power S.r.L. electric power generating wind farm projects in Italy noted above), leasehold improvements, information technology equipment and office equipment. The increase in capital expenditures has been driven primarily by our Global E&C Group, with particular increases driven by operations in Asia, Italy and the U.S. Our Global Power Group capital expenditure increase was driven by our European operations.
     Net cash used in financing activities in the first fiscal nine months of 2008 was $37,200 compared to $17,500 of net cash provided by financing activities in the comparable period in fiscal year 2007. The net cash used in financing activities in the first fiscal nine months of 2008 is attributable primarily to $50,000 used to repurchase and retire our common shares associated with the share repurchase program we announced on September 12, 2008, distributions to minority third-party ownership interests of $9,600 and repayment of long-term debt and capital lease obligations of $9,400, partially offset by proceeds from the issuance of long-term project debt of $28,700 and cash provided from exercises of stock options of $2,600. The net cash provided by financing activities in the first fiscal nine months of 2007 primarily reflects cash provided from exercises of stock options and warrants, partially offset by the repayment of our convertible notes, which matured in June 2007, and a scheduled payment on our limited-recourse project debt.

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     Outlook
     Our liquidity forecasts cover, among other analyses, existing cash balances, cash flows from operations, cash repatriations from non-U.S. subsidiaries, working capital needs, unused credit line availability and claim recoveries and proceeds from asset sales, if any. These forecasts extend over a rolling 12-month period. Based on these forecasts, we believe our existing cash balances and forecasted net cash provided by operating activities will be sufficient to fund our operations throughout the next 12 months. Based on these forecasts, our primary cash needs will be to fund working capital, capital expenditures, asbestos liability indemnity and defense costs, acquisitions and up to $750,000 for our common share repurchase program that we announced on September 12, 2008. The majority of our cash balances are invested in short-term interest bearing accounts with maturities of less than three months. We continue to consider investing some of our cash in longer-term investment opportunities, including the acquisition of other entities or operations in the engineering and construction industry or power industry and/or the reduction of certain liabilities such as unfunded pension liabilities. We may elect to make discretionary contributions to our U.S. and U.K. pension plans during the fiscal fourth quarter of 2008.
     We have performed an evaluation of our credit exposure in response to the current global credit market crisis. The evaluation included analysis of counterparty credit exposure, in general, and specifically related to cash and cash equivalents, bonding and bank guarantees, forward currency contracts, pension assets, insurance assets and clients. We believe that we are well diversified and third-party credit exposure should not expose us to material downside risks. However, the crisis continues to develop at a rapid pace. We will continue to closely monitor the global liquidity and credit market crisis and continue to take appropriate actions, as necessary, to limit our exposure.
     It is customary in the industries in which we operate to provide standby letters of credit, bank guarantees or performance bonds in favor of clients to secure obligations under contracts. We believe that we will have sufficient letter of credit capacity from existing facilities throughout the next 12 months.
     Our domestic operating entities do not generate sufficient cash flows to fund our obligations related to corporate overhead expenses and asbestos-related liabilities. Consequently, we require cash repatriations from our non-U.S. subsidiaries in the normal course of our operations to meet our domestic cash needs and have successfully repatriated cash for many years. We believe that we can repatriate the required amount of cash from our foreign subsidiaries and we continue to have access to the revolving credit portion of our domestic senior credit facility, if needed.
     Beginning in the fourth fiscal quarter of 2008, we have begun to repatriate cash from our non-U.S. subsidiaries to partially fund our common share repurchase program, which is described below. As of October 24, 2008, we have repatriated cash totaling approximately $125,400 to fund our common share repurchase program.
     We had net cash inflows of $21,800 as a result of insurance settlement proceeds in excess of the asbestos liability indemnity payments and defense costs during the fiscal nine months ended September 26, 2008. We expect to have net cash inflows of $17,400 as a result of insurance settlement proceeds in excess of the asbestos liability indemnity and defense costs for the full twelve months of fiscal year 2008. This estimate assumes no additional settlements with insurance companies or elections by us to fund additional payments. As we continue to collect cash from insurance settlements and assuming no increase in our asbestos-related insurance liability or any future insurance settlements, the asbestos-related insurance receivable recorded on our balance sheet will continue to decrease.
     We anticipate spending 30,000 (approximately $43,800 at the exchange rate as of September 26, 2008) in FW Power S.r.L. in fiscal year 2008 as we continue construction of the electric power generating wind farm projects in Italy, of which 12,500 (approximately $19,000 at the exchange rate as of September 26, 2008) was spent as of September 26, 2008. We have secured total borrowing capacity under the FW Power S.r.L. credit facilities of 75,400 (approximately $110,100 at the exchange rate as of September 26, 2008).
     We had $291,800 and $245,800 of letters of credit outstanding under our domestic senior credit agreement as of September 26, 2008 and December 28, 2007, respectively. The letter of credit fees now range from 1.50% to 1.60%, excluding a fronting fee of 0.125% per annum. We do not intend to borrow under our domestic senior revolving credit facility during fiscal year 2008. A portion of the letters of credit issued under the domestic senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in the credit rating assigned to the domestic senior credit agreement by Moody’s Investors Service and/or Standard & Poor’s. However, this performance pricing is not expected to materially impact our liquidity or capital resources in fiscal year 2008.

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     We do not expect to be required to make any mandatory contributions to our U.S. pension plans in fiscal year 2008. We expect to contribute a total of approximately $32,700 to our foreign pension plans in fiscal year 2008, of which $24,700 has been contributed in the fiscal nine months ended September 26, 2008.
     Please refer to Note 4 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information regarding our debt obligations.
     On September 12, 2008, we announced a share repurchase program pursuant to which we are authorized to repurchase up to $750,000 of our outstanding common shares. Any repurchases will be made at our discretion in the open market or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements and will depend on a variety of factors, including market conditions, share price and other factors. The program does not obligate us to acquire any particular number of common shares. The program has no expiration date and may be suspended or discontinued at any time. Any repurchases made pursuant to the share repurchase program will be funded using our cash on hand. Please refer to Part II, Item 2, for a description of the common shares purchased pursuant to this program in the fiscal quarter ended September 26, 2008. Subsequent to the quarter ended September 26, 2008, we repurchased an aggregate of 9,233,394 common shares that settled prior to November 5, 2008 pursuant to our common share repurchase program for an aggregate cost of $288,100. Cumulatively through November 5, 2008, we have repurchased 10,518,942 common shares for an aggregate cost of $338,173. We have executed the repurchases in accordance with a 10b5-1 repurchase plan as well as other open market purchases. The 10b5-1 repurchase plan allows us to purchase common shares at times when we may not otherwise do so due to regulatory or internal restrictions. Purchases under the 10b5-1 repurchase plan are based on parameters set forth in the plan.
     Effective September 29, 2008, we and the requisite lenders under our domestic senior credit agreement amended the domestic senior credit agreement to (1) allow us to use cash of up to $750,000 to repurchase our outstanding common shares under our common share repurchase program, subject to certain conditions, and (2) increase the aggregate amount of permissible capital expenditures from $40,000 to $80,000 for fiscal year 2008 and $70,000 for fiscal years thereafter, subject to certain adjustments that have been reflected in the domestic senior credit agreement since its original execution in September 2006, including, among other items, an exclusion related to capital expenditures that are financed by special-purpose project debt. Please refer to Note 4 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for a detailed listing of our special-purpose project debt.
     On October 3, 2008, we acquired $19,200 of our 1999C Robbins Bonds (as defined in Note 4 to the condensed consolidated financial statements in this quarterly report on Form 10-Q) for $19,000 of cash, plus accrued and unpaid interest to date. After the acquisition, we have $1,300 of 1999C Robbins Bonds outstanding.
     We have not declared or paid a cash dividend since July 2001 and we do not have any plans to declare or pay any cash dividends. Our current credit agreement contains limitations on cash dividend payments as well as other restricted payments.
Off-Balance Sheet Arrangements
     We own several noncontrolling equity interests in power projects in Chile and Italy. Certain of the projects have third-party debt that is not consolidated in our balance sheet. We have also issued certain guarantees for the Chilean project. Please refer to Note 3 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for further information related to these projects.

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Backlog and New Orders
     The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent, which we have determined are legally binding and likely to proceed. Although backlog represents only business that is considered likely to be performed, cancellations or scope adjustments may and do occur. The elapsed time from the award of a contract to completion of performance may be up to approximately four years. The dollar amount of backlog is not necessarily indicative of our future earnings related to the performance of such work due to factors outside our control, such as changes in project schedules, scope adjustments or project cancellations. We cannot predict with certainty the portion of backlog to be performed in a given year. Backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.
     Backlog measured in Foster Wheeler scope reflects the dollar value of backlog excluding third-party costs incurred by us on a reimbursable basis as agent or principal, which we refer to as flow-through costs. Foster Wheeler scope measures the component of backlog with profit potential and corresponds to our services plus fees for reimbursable contracts and total selling price for fixed-price or lump-sum contracts.

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    September 26, 2008     September 28, 2007  
    Global     Global             Global     Global        
    E&C     Power             E&C     Power        
    Group     Group     Total     Group     Group     Total  
NEW ORDERS (FUTURE REVENUES) BY PROJECT LOCATION :
                                               
 
                                               
Fiscal Quarters Ended
                                               
North America
  $ 74,600     $ 106,600     $ 181,200     $ 131,000     $ 73,100     $ 204,100  
South America
    29,600       95,300       124,900       7,400       10,800       18,200  
Europe
    381,600       132,300       513,900       163,800       196,300       360,100  
Asia
    343,500       88,000       431,500       1,022,100       20,000       1,042,100  
Middle East
    62,400       100       62,500       104,200       400       104,600  
Australasia and other
    63,500       12,800       76,300       143,500       5,900       149,400  
 
                                   
Total
  $ 955,200     $ 435,100     $ 1,390,300     $ 1,572,000     $ 306,500     $ 1,878,500  
 
                                   
 
                                               
Fiscal Nine Months Ended
                                               
North America
  $ 364,100     $ 492,600     $ 856,700     $ 214,700     $ 639,900     $ 854,600  
South America
    44,900       126,000       170,900       13,600       79,400       93,000  
Europe
    939,400       417,100       1,356,500       567,800       531,200       1,099,000  
Asia
    651,100       116,800       767,900       1,455,300       140,200       1,595,500  
Middle East
    194,400       100       194,500       355,700       5,200       360,900  
Australasia and other
    114,900       13,100       128,000       268,100       7,200       275,300  
 
                                   
Total
  $ 2,308,800     $ 1,165,700     $ 3,474,500     $ 2,875,200     $ 1,403,100     $ 4,278,300  
 
                                   
 
                                               
NEW ORDERS (FUTURE REVENUES) BY INDUSTRY:
                                               
 
                                               
Fiscal Quarters Ended
                                               
Power generation
  $ 5,300     $ 403,000     $ 408,300     $ 12,700     $ 275,300     $ 288,000  
Oil refining
    561,400             561,400       274,000             274,000  
Pharmaceutical
    44,500             44,500       21,800             21,800  
Oil and gas
    116,200             116,200       176,700             176,700  
Chemical/petrochemical
    230,000             230,000       1,073,200             1,073,200  
Power plant operation and maintenance
          32,100       32,100             31,200       31,200  
Environmental
    8,200             8,200       7,300             7,300  
Other, net of eliminations
    (10,400 )           (10,400 )     6,300             6,300  
 
                                   
Total
  $ 955,200     $ 435,100     $ 1,390,300     $ 1,572,000     $ 306,500     $ 1,878,500  
 
                                   
 
                                               
Fiscal Nine Months Ended
                                               
Power generation
  $ 43,800     $ 1,067,700     $ 1,111,500     $ 20,400     $ 1,313,600     $ 1,334,000  
Oil refining
    1,429,200             1,429,200       978,000             978,000  
Pharmaceutical
    84,500             84,500       80,500             80,500  
Oil and gas
    240,400             240,400       462,500             462,500  
Chemical/petrochemical
    483,000             483,000       1,266,900             1,266,900  
Power plant operation and maintenance
          98,000       98,000             89,500       89,500  
Environmental
    23,300             23,300       25,400             25,400  
Other, net of eliminations
    4,600             4,600       41,500             41,500  
 
                                   
Total
  $ 2,308,800     $ 1,165,700     $ 3,474,500     $ 2,875,200     $ 1,403,100     $ 4,278,300  
 
                                   

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    September 26, 2008     September 28, 2007  
    Global     Global             Global     Global        
    E&C     Power             E&C     Power        
    Group     Group     Total     Group     Group     Total  
BACKLOG (FUTURE REVENUES) BY CONTRACT TYPE:
                                               
Lump-sum turnkey
  $ 17,900     $ 345,100     $ 363,000     $ 116,300     $ 525,000     $ 641,300  
Other fixed-price
    441,600       946,600       1,388,200       401,900       655,900       1,057,800  
Reimbursable
    5,351,800       172,100       5,523,900       4,385,800       199,700       4,585,500  
Eliminations
    (700 )     (12,200 )     (12,900 )     (10,500 )     (1,000 )     (11,500 )
 
                                   
Total
  $ 5,810,600     $ 1,451,600     $ 7,262,200     $ 4,893,500     $ 1,379,600     $ 6,273,100  
 
                                   
 
                                               
BACKLOG (FUTURE REVENUES) BY PROJECT LOCATION:
                                               
North America
  $ 302,900     $ 612,400     $ 915,300     $ 218,900     $ 542,200     $ 761,100  
South America
    44,500       168,200       212,700       12,200       86,900       99,100  
Europe
    877,800       544,300       1,422,100       642,500       616,200       1,258,700  
Asia
    1,598,800       119,000       1,717,800       2,265,400       127,700       2,393,100  
Middle East
    443,300       100       443,400       1,205,900       600       1,206,500  
Australasia and other
    2,543,300       7,600       2,550,900       548,600       6,000       554,600  
 
                                   
Total
  $ 5,810,600     $ 1,451,600     $ 7,262,200     $ 4,893,500     $ 1,379,600     $ 6,273,100  
 
                                   
 
                                               
BACKLOG (FUTURE REVENUES) BY INDUSTRY:
                                               
Power generation
  $ 51,800     $ 1,329,700     $ 1,381,500     $ 101,000     $ 1,263,100     $ 1,364,100  
Oil refining
    1,778,500             1,778,500       1,761,200             1,761,200  
Pharmaceutical
    66,600             66,600       58,000             58,000  
Oil and gas
    2,638,400             2,638,400       718,700             718,700  
Chemical/petrochemical
    1,243,400             1,243,400       2,186,100             2,186,100  
Power plant operation and maintenance
          121,900       121,900             116,500       116,500  
Environmental
    13,400             13,400       42,200             42,200  
Other, net of eliminations
    18,500             18,500       26,300             26,300  
 
                                   
Total
  $ 5,810,600     $ 1,451,600     $ 7,262,200     $ 4,893,500     $ 1,379,600     $ 6,273,100  
 
                                   
 
                                               
FOSTER WHEELER SCOPE IN BACKLOG
  $ 1,754,700     $ 1,438,700     $ 3,193,400     $ 1,645,100     $ 1,366,500     $ 3,011,600  
 
                                   
 
                                               
E&C MAN-HOURS IN BACKLOG (in thousands)
    14,400               14,400       13,300               13,300  
 
                                       
Inflation
     The effect of inflation on our financial results is minimal. Although a majority of our revenues are realized under long-term contracts, the selling prices of such contracts, established for deliveries in the future, generally reflect estimated costs to complete the projects in these future periods. In addition, many of our projects are reimbursable at actual cost plus a fee, while some of the fixed-price contracts provide for price adjustments through escalation clauses.
Application of Critical Accounting Estimates
     Our condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America. Management and the Audit Committee of our Board of Directors approve the critical accounting policies.
     A full discussion of our critical accounting policies and estimates is included in our 2007 Form 10-K. We did not have a significant change to the application of our critical accounting policies and estimates during the first fiscal nine months of 2008.

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Accounting Developments
     In September 2006, the Financial Accounting Standards Board, or FASB, issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The standard is effective for financial assets and liabilities, as well as for any other assets and liabilities that are required to be measured at fair value on a recurring basis, in financial statements for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued a partial one-year deferral of SFAS No. 157 for nonfinancial assets and liabilities that are only subject to fair value measurement on a nonrecurring basis. We have elected to defer the application of SFAS No. 157 for our nonfinancial assets and liabilities measured at fair value on a nonrecurring basis until the fiscal year beginning December 27, 2008, and are in the process of assessing its impact on our financial position and results of operations related to such assets and liabilities. Our financial assets and liabilities that are recorded at fair value consist primarily of the assets or liabilities arising from derivative financial instruments. The adoption of SFAS No. 157 did not have a material effect on our financial position or results of operations.
     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R replaces SFAS No. 141, “Business Combinations” and changes the accounting treatment for business acquisitions. SFAS No. 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. Most of the provisions of SFAS No. 141R apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted. We are currently assessing the impact that SFAS No. 141R may have on our financial position, results of operations and cash flows.
     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 amends the accounting and reporting standards for the noncontrolling interest in a subsidiary (often referred to as “minority interest”) and for the deconsolidation of a subsidiary. Under SFAS No. 160, the noncontrolling interest in a subsidiary is reported as equity in the parent company’s consolidated financial statements. SFAS No. 160 also requires that the parent company’s consolidated statement of operations include both the parent and noncontrolling interest share of the subsidiary’s statement of operations. Formerly, the noncontrolling interest share was shown as a reduction of income on the parent’s consolidated statement of operations. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS No. 160 is to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied; however, presentation and disclosure requirements shall be applied retrospectively for all periods presented. We do not believe that SFAS No. 160 will have a significant impact on our financial position, results of operations and cash flows.
     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 requires enhanced disclosures to enable investors to better understand the effects of derivative instruments and hedging activities on an entity’s financial position, financial performance and cash flows. SFAS No. 161 changes the disclosure requirements about the location and amounts of derivative instruments in an entity’s financial statements, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect the company’s financial position, financial performance and cash flows. Additionally, SFAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS No. 161 also requires more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, SFAS No. 161 requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently assessing the impact that SFAS No. 161 may have on our financial statement disclosures.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     During the fiscal quarter and nine months ended September 26, 2008, there were no material changes in the market risks as described in our annual report on Form 10-K for the fiscal year ended December 28, 2007.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
     We maintain disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.
     As of the end of the period covered by this report, our chief executive officer and our chief financial officer carried out an evaluation, with the participation of our Disclosure Committee and management, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) pursuant to Exchange Act Rule 13a-15. Based on this evaluation, our chief executive officer and our chief financial officer concluded, at the reasonable assurance level, that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
     There were no changes in our internal control over financial reporting in the fiscal quarter ended September 26, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
     Please refer to Note 12 to the condensed consolidated financial statements in this quarterly report on Form 10-Q for a discussion of legal proceedings, which is incorporated by reference in this Part II.
ITEM 1A. RISK FACTORS
     Information regarding our risk factors appears in Part I, Item 1A, “Risk Factors,” in our annual report on Form 10-K for the fiscal year ended December 28, 2007, which we filed with the SEC on February 26, 2008. There have been no material changes in those risk factors.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (amounts in thousands of dollars, except share data and per share amounts)
     (c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
     On September 12, 2008, we announced a share repurchase program pursuant to which we are authorized to repurchase up to $750,000 of our outstanding common shares. The following table provides information with respect to common share purchases during the fiscal third quarter of 2008.
                                 
                    Total Number of     Approximate  
                    Shares Purchased     Dollar Value of  
                    as Part of     Shares that May  
            Average     Publicly     Yet Be Purchased  
    Total Number of     Price Paid     Announced Plans     Under the Plans  
Fiscal Month   Shares Purchased (1)     per Share     or Programs     or Programs  
June 28, 2008 through July 25, 2008
        $                
July 26, 2008 through August 22, 2008
                         
August 23, 2008 through September 26, 2008
    1,285,548       38.89       1,285,548          
 
                         
Total
    1,285,548     $ 38.89       1,285,548 (2)   $ 699,999  
 
                         
 
(1)   During the fiscal third quarter of 2008, we repurchased an aggregate of 1,285,548 shares of Foster Wheeler Ltd. common shares in open market transactions pursuant to the repurchase program that was publicly announced on September 12, 2008 and which authorizes us to repurchase up to $750,000 of our outstanding common shares. The repurchase program has no expiration date and may be suspended for periods or discontinued at any time. We did not repurchase any of our common shares other than through our publicly announced repurchase program.
 
(2)   As of September 26, 2008, an aggregate of 1,285,548 shares were purchased for a total of $50,001 since the inception of the repurchase program announced on September 12, 2008.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
     None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     None.
ITEM 5. OTHER INFORMATION
     None.

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ITEM 6.
  EXHIBITS
     
Exhibit No.   Exhibits
 
   
3.1
  Memorandum of Association of Foster Wheeler Ltd. (Filed as Annex II to Foster Wheeler Ltd.’s Form S-4/A (File No. 333-52468) filed on March 9, 2001, and incorporated herein by reference.)
 
   
3.2
  Memoranda of Reduction of Share Capital and Memorandum of Increase in Share Capital each dated December 1, 2004. (Filed as Exhibit 99.2 to Foster Wheeler Ltd.’s Form 8-K, dated November 29, 2004 and filed on December 2, 2004, and incorporated herein by reference.)
 
   
3.3
  Certificate of Designation relating to Foster Wheeler Ltd.’s Series B Convertible Preferred Shares, adopted on September 24, 2004. (Filed as Exhibit 3.1 to Foster Wheeler Ltd.’s Form 10-Q for the quarter ended September 24, 2004, and incorporated herein by reference.)
 
   
3.4
  Bye-Laws of Foster Wheeler Ltd., amended May 9, 2006. (Filed as Exhibit 3.2 to Foster Wheeler Ltd.’s Form 8-K, dated May 9, 2006 and filed on May 12, 2006, and incorporated herein by reference.)
 
   
3.5
  Memorandum of Increase of Share Capital dated February 7, 2008. (Filed as Exhibit 3.5 to Foster Wheeler Ltd.’s Form 10-K for the fiscal year ended December 28, 2007, and incorporated herein by reference.)
 
   
10.1
  Amendment No. 2, dated September 29, 2008, to the Credit Agreement, dated September 13, 2006, between Foster Wheeler LLC, Foster Wheeler Inc., Foster Wheeler USA Corporation, Foster Wheeler North America Corp., Foster Wheeler Energy Corporation and Foster Wheeler International Corporation, as borrowers, Foster Wheeler Ltd., Foster Wheeler Holdings Ltd., the subsidiary guarantors party thereto, the lenders party thereto, and BNP Paribas. (Filed as Exhibit 10.1 to Foster Wheeler Ltd.’s Form 8-K, dated September 29, 2008 and filed on October 14, 2008, and incorporated herein by reference.)
 
   
10.2
  Employment Agreement, dated as of August 20, 2008, between Foster Wheeler Ltd. and Peter D. Rose.
 
   
10.3
  Agreement for the Termination of Fixed Term Employment Contract, dated as of September 30, 2008, between Foster Wheeler Continental Europe S.r.L. and Umberto della Sala.
 
   
10.4
  Fixed Term Employment Agreement, dated as of October 1, 2008, between Foster Wheeler Global E&C S.r.L. and Umberto della Sala.
 
   
10.5
  First Amendment to the Employment Agreement, dated as of October 1, 2008, between Foster Wheeler Ltd. and Umberto della Sala.
 
   
10.6
  Deed of Variation, dated as of October 8, 2008, between Foster Wheeler Energy Limited and David Wardlaw. (Filed as Exhibit 10.1 to Foster Wheeler Ltd.’s Form 8-K, dated October 8, 2008 and filed on October 14, 2008, and incorporated herein by reference.)
 
   
23.1
  Consent of Analysis, Research & Planning Corporation.
 
   
23.2
  Consent of Peterson Risk Consulting.
 
   
31.1
  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Raymond J. Milchovich.
 
   
31.2
  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Franco Baseotto.
 
   
32.1
  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Raymond J. Milchovich.
 
   
32.2
  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Franco Baseotto.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  FOSTER WHEELER LTD.
(Registrant)                        
 
 
Date: November 5, 2008  /s/ Raymond J. Milchovich    
  Raymond J. Milchovich   
  Chairman and Chief Executive Officer   
 
     
Date: November 5, 2008  /s/ Franco Baseotto    
  Franco Baseotto   
  Executive Vice President, Chief Financial Officer and Treasurer   
 

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