ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS:
Foster Wheeler Corporation was incorporated under the laws of the State of New York in 1900. Executive offices of Foster Wheeler Corporation are at Perryville Corporate Park, Clinton, New Jersey, 08809-4000 (Telephone (908) 730-4000). Except as the context otherwise requires, the term "Foster Wheeler" as used herein includes Foster Wheeler Corporation and its subsidiaries.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS:
Incorporated by reference to Note 16 on page 35 in the Notes to Financial Statements in Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993.
NARRATIVE DESCRIPTION OF BUSINESS:
Commencing in 1993, the activities of the Corporation have been redefined to focus on three core business groups covering Engineering and Construction, Energy Equipment and Power Systems. Prior to 1993, the Industrial and Environmental Group was reported as a separate segment. Those companies previously reported within the Industrial and Environmental Group have been reclassified as follows: Glitsch International, Inc. is now considered part of the Energy Equipment Group; Thermacote Welco Company, which was sold in September 1993, Barsotti's Inc. and Ullrich Copper, Inc. are aggregated as part of Corporate and Financial Services. Certain reclassifications have been made to conform prior years' data to the current presentation. These reclassifications had no impact on the previously reported consolidated earnings of the Corporation.
The three business groups are: the Engineering and Construction Group that consists primarily of the design, engineering and construction of process plants and fired heaters for oil refineries, synthetic fuels, and chemical producers; the Energy Equipment Group that consists mainly of the design and fabrication of steam generators and condensers, and suppliers of mass-transfer equipment, tower packings and industrial wire mesh; and the Power Systems Group engaged in the owning, leasing to, or operation for third parties of solid waste-to-energy and cogeneration plants. Foster Wheeler markets its services and products through a staff of sales and marketing personnel and through a network of sales representatives. The businesses of its industry groups are not seasonal nor are they dependent on a single customer or a very few customers. No one customer accounts for 10 percent or more of Foster Wheeler's consolidated revenues, although in any given year one customer could contribute significantly to such revenues.
The materials used in Foster Wheeler's manufacturing and construction operations are obtained from both domestic and foreign sources. Materials, which consist mainly of steel products and manufactured items, are heavily dependent on foreign sources, particularly on overseas projects.
Generally, lead time for delivery of materials does not presently constitute a problem.
Foster Wheeler owns and licenses patents, trademarks and know-how which are used in each of its industry groups. Such licenses, patents and trademarks are of varying durations. No industry group of the Corporation is materially dependent upon any particular or related group of patents, trademarks or licenses. Foster Wheeler has licensed companies throughout the world to manufacture marine and stationary steam generators and related equipment and certain of its other products. Principal licensees are in Japan, the Netherlands, Italy, Spain, Portugal, Norway and England.
For the most part, Foster Wheeler products are custom designed and manufactured and are not produced for inventory. As is the practice in the Engineering and Construction Group and Energy Equipment Group, customers often make a down payment at the time a contract is entered into, and continue to make progress payments until the contract is completed and the work has been accepted as meeting contract guarantees.
The Engineering and Construction Group backlog at the end of 1993 was $2.7 billion. Refinery upgrading and reconfiguration projects continue to be the major sources of new orders for the Group with strong markets in the Pacific Rim and the Middle East. The Energy Equipment Group backlog at the end of 1993 was $890.5 million.
Foster Wheeler had a backlog of firm orders as of December 31, 1993 of $3,884,100,000 as compared to a backlog as of December 25, 1992 of $3,806,800,000. The elapsed time from the award of a contract to completion of performance may be up to four years. The amount of backlog at December 31, 1993 should not necessarily be considered indicative of Foster Wheeler's total revenues for 1994, since contracts may under certain circumstances be accelerated or delayed and new orders booked in 1994 may be billed during that year.
The backlog by major industry segments as of December 31, 1993 and December 25, 1992 is as follows:
The Power Systems projects consist of the following:
* Includes Recycling.
For waste-to-energy (resource recovery) projects, generally, it takes approximately two to three years from award of a contract and the signing of a service agreement with a community to the beginning of construction.
Many companies compete in the Engineering and Construction segment of Foster Wheeler's business. Management estimates, based on industrial publications, that it is among the ten largest of the many large and small companies engaged in the design and construction of petroleum refineries and chemical plants. In the manufacture of refinery and chemical plant equipment, neither Foster Wheeler nor any other single company contributes a large percentage of the total volume of such business.
In the Energy Equipment Group, Foster Wheeler competes in the United States with three major and a number of smaller manufacturers of coal, oil, and gas-fired steam generating equipment, and, based on a review of trade association materials, it is third largest in this area. Its two major competitors are Combustion Engineering, Inc., a wholly owned subsidiary of ABB Asea Brown Boveri, Ltd.; and Babcock and Wilcox Co., a wholly owned subsidiary of J. Ray McDermott & Co., Inc. It competes in the United States with seven or more manufacturers of condensers, feedwater heaters and heat transfer equipment, and is among the largest of these manufacturers.
For the most part, contracts are awarded on the basis of price, delivery, performance and service.
Foster Wheeler is continually engaged in research and development efforts both in performance and analytical services on current projects and in development of new products and processes. During 1993, approximately $8,350,000, and in 1992 and 1991, $6,900,000 and $7,500,000, respectively, was spent on Foster Wheeler sponsored research activities. During the same periods, approximately $40,850,000, $32,300,000, and $27,200,000, respectively, was spent on customer sponsored research.
Foster Wheeler and its domestic subsidiaries are subject to certain Federal, state and local environmental, occupation health and product safety laws. Foster Wheeler believes all its operations are in compliance with such laws and does not anticipate any material capital expenditures or adverse effect on earnings in maintaining compliance with such laws.
Foster Wheeler had approximately 9,350 full-time employees on December 31, 1993. Following is a tabulation of the number of full-time employees of Foster Wheeler in each of its industry segments for the past three years:
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES:
Incorporated by reference to Note 16 on page 35 in the Notes to Financial Statements in Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993.
ITEM 2.
ITEM 2. PROPERTIES
COMPANY AND (INDUSTRY SEGMENT*)
COMPANY AND (INDUSTRY SEGMENT*)
COMPANY AND (INDUSTRY SEGMENT*)
COMPANY AND (INDUSTRY SEGMENT*)
(1) Portion leased or subleased to a responsible tenant. (2) Entire facility leased to a responsible tenant, with a portion being subleased back to Foster Wheeler subsidiaries. (3) 50% ownership interest.
With the exception of the New York Office of the Corporation, locations of less than 10,000 square feet are not listed. Except as noted above, the properties set forth are held in fee. All or part of listed locations may be leased or subleased to other affiliates. All properties are in good condition and adequate for their intended use.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Incorporated by reference to Note 12 on page 33 in the Notes to Financial Statements in Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 4(A) EXECUTIVE OFFICERS OF THE REGISTRANT
In accordance with General Instruction G (3) of Form 10-K information regarding executive officers is included in PART I.
The executive officers of Foster Wheeler, all of whom have held executive positions with Foster Wheeler or its subsidiaries for more than the past five years, except Messrs. Bartoli, O'Brien and Whittaker, are as follows:
Each officer holds office for a term running until the Board of Directors meeting next following the Annual Meeting of Stockholders and until his/her successor is elected and qualified. There are no family relationships between the officers listed above. There are no arrangements or understandings between any of the listed officers and any other person, pursuant to which he/she was elected as an officer.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated by reference to Note 11 on page 33 in Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993. The Corporation's common stock is traded on the New York Stock Exchange. The approximate number of stockholders of record as of December 31, 1993 was 8,008.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
(In Thousands of Dollars, Except Per Share Data)
(1) As of the beginning of 1992, the Corporation adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The effect of the accounting change at the beginning of 1992 was a charge to earnings of $91.3 million after tax and valuation allowance which amounted to $2.57 per share.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Incorporated by reference to pages 18 to 22 in Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference to the following sections of Foster Wheeler's Annual Report to Stockholders for the year ended December 31, 1993:
A. Consolidated Balance Sheet, December 31, 1993 and December 25, 1992 (page 23)
B. Consolidated Statement of Earnings for the years ended December 31, 1993; December 25, 1992; and December 27, 1991 (page 24)
C. Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1993; December 25, 1992; and December 27, 1991 (page 25)
D. Consolidated Statement of Cash Flows for the years ended December 31, 1993; December 25, 1992; and December 27, 1991 (page 26)
E. Notes to Financial Statements (pages 27-35)
F. Report of Independent Accountants (page 24)
Schedules Required by Regulations S-X
G. Schedule V, Land, Buildings and Equipment (page 23 of Form 10-K)
H. Schedule VI, Accumulated Depreciation of Buildings and Equipment (page 24 of Form 10-K)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference to pages 2-4 of Foster Wheeler's Proxy Statement, dated March 18, 1994, for the Annual Meeting of Stockholders to be held April 25, 1994. Certain information regarding executive officers is included in Part I in accordance with General Instruction G (3) of Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to pages 6-12 of Foster Wheeler's Proxy Statement, dated March 18, 1994, for the Annual Meeting of Stockholders to be held April 25, 1994.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to pages 2-4 of Foster Wheeler's Proxy Statement, dated March 18, 1994, for the Annual Meeting of Stockholders to be held April 25, 1994.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1 - Financial Statements
The index to Financial Statements is incorporated in this paragraph by reference to Item 8, page 14
2 - Financial Statement Schedules
Schedule V, Land, Buildings and Equipment, page 23
Schedule VI, Accumulated Depreciation of Buildings and Equipment,
All other schedules and financial statements have been omitted because of the absence of conditions requiring them or because the required information is shown in the financial statements or the notes thereto.
(b) Reports on Form 8-K:
The following reports on Form 8-K have been filed during the period September 25 through December 31, 1993:
None
3 - The following Exhibits are required by Item 601 of Regulation S-K and by paragraph (c) of Item 14 of Form 10-K:
(2) Not applicable
(3) By-Laws of Registrant as amended through February 22, 1994 and filed as part of this report.
(4) Not applicable
(9) Not applicable
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Except for those portions thereof which are expressly incorporated by reference in this filing, the Financial Section of the Annual Report to Stockholders of Foster Wheeler Corporation (pages 17-35) for the fiscal year ended December 31, 1993 is furnished for the information of the Commission and is not deemed "filed" as part of this filing.
(18) Not applicable
(21) Subsidiaries of the registrant (pages 18 and 19)
(22) Not applicable
(23) See consent of Independent Accountants (page 21)
(24) Not applicable
(27) Not applicable
(28) Not applicable
For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into registrant's Registration Statements on Form S-8 Nos. 2-91384 (filed May 29, 1984), 33-34694 (filed May 2, 1990) and 33-40878 (filed May 29, 1991):
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT FOSTER WHEELER CORPORATION (PARENT) PRINCIPAL CONSOLIDATED, WHOLLY OWNED SUBSIDIARIES (DIRECTLY OR INDIRECTLY) Listed by Jurisdiction of Organization
PRINCIPAL AFFILIATED COMPANIES (PERCENT DIRECTLY OR INDIRECTLY OWNED BY FOSTER WHEELER CORPORATION)
COLUMBIA Foster Wheeler Andina, S.A., Bogota (19%)
ITALY F.FW Fiatavio Foster Wheeler Per L'Energia, S.p.A., Milan (40%) Software Technology, S.p.A., Milan (90%)
NIGERIA Foster Wheeler (Nigeria) Ltd., Lagos (60%)
TURKEY Birlesik Insaat ve Muhendislik, A.S., Istanbul (51%)
A copy of the By-Laws of the Corporation, as amended through February 22, 1994, is available upon request to the Office of the Secretary, Foster Wheeler Corporation, Perryville Corporate Park, Clinton, New Jersey 08809-4000.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of Foster Wheeler Corporation on Form S-8 (File No.'s 2- 91384, 33-34694 and 33-40878) of our report dated February 14, 1994, on our audits of the consolidated financial statements of Foster Wheeler Corporation and Subsidiaries as of December 31, 1993 and December 25, 1992, and for each of the three years in the period ended December 31, 1993, which report is incorporated by reference in this Annual Report on Form 10-K.
Coopers & Lybrand
New York, New York March 25, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
Our report on the consolidated financial statements of Foster Wheeler Corporation and Subsidiaries has been incorporated by reference in this Form 10-K from page 24 of the 1993 Annual Report to Stockholders of Foster Wheeler Corporation. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 15 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
Coopers & Lybrand
New York, New York February 14, 1994
FOSTER WHEELER CORPORATION AND SUBSIDIARIES SCHEDULE V LAND, BUILDINGS AND EQUIPMENT THREE YEARS ENDED DECEMBER 31, 1993 (IN THOUSANDS OF DOLLARS)
(a) Exchange translation adjustment. (b) Primarily waste-to-energy and cogeneration facilities under construction by the Power Systems Group.
FOSTER WHEELER CORPORATION AND SUBSIDIARIES SCHEDULE VI ACCUMULATED DEPRECIATION OF BUILDINGS AND EQUIPMENT THREE YEARS ENDED DECEMBER 31, 1993 (IN THOUSANDS OF DOLLARS)
(a) Exchange translation adjustment.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FOSTER WHEELER CORPORATION (Registrant)
Dated March 25, 1994 By /s/ Jack E. Deones -------------------- ------------------------------ Jack E. Deones Vice President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed, as of March 25, 1994, by the following persons on behalf of the registrant, in the capacities indicated.
Signature Title --------- -----
/s/ Louis E. Azzato Director and Chairman --------------------------- Louis E. Azzato (Principal Executive Officer)
/s/ Richard J. Swift Director and President --------------------------- Richard J. Swift (Principal Operating Officer)
/s/ David J. Roberts Executive Vice President - Finance --------------------------- David J. Roberts (Principal Financial Officer)
/s/ George S. White Vice President and Controller --------------------------- George S. White (Principal Accounting Officer)
/s/ Harold E. Kennedy Director and Vice Chairman --------------------------- Harold E. Kennedy
/s/ Leland E. Boren Director --------------------------- Leland E. Boren
Director --------------------------- Martha J. Clark
/s/ Kenneth A. DeGhetto Director --------------------------- Kenneth A. DeGhetto
Signature Title --------- -----
/s/ E. James Ferland Director --------------------------- E. James Ferland
/s/ John A. Hinds Director --------------------------- John A. Hinds
/s/ Joseph J. Melone Director --------------------------- Joseph J. Melone
/s/ Frank E. Perkins Director --------------------------- Frank E. Perkins
/s/ John Timko, Jr. Director --------------------------- John Timko, Jr.
/s/ Charles Y. C. Tse Director --------------------------- Charles Y. C. Tse
/s/ Robert Van Buren Director -------------------------- Robert Van Buren
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- (2) Not applicable
(3) By-Laws of Registrant as amended through February 22, 1994 and filed as part of this report.
(4) Not applicable
(9) Not applicable
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Except for those portions thereof which are expressly incorporated by reference in this filing, the Financial Section of the Annual Report to Stockholders of Foster Wheeler Corporation (pages 17-35) for the fiscal year ended December 31, 1993 is furnished for the information of the Commission and is not deemed "filed" as part of this filing.
(18) Not applicable
(21) Subsidiaries of the registrant (pages 18 and 19)
(22) Not applicable
(23) See consent of Independent Accountants (page 21)
(24) Not applicable
(27) Not applicable
(28) Not applicable