Document_Entity_Information
Document Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 25, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Foster Wheeler AG | ' |
Entity Central Index Key | '0001130385 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 99,713,289 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONSOLIDATED STATEMENT OF OPERATIONS | ' | ' |
Operating revenues | $733,699 | $790,144 |
Cost of operating revenues | 618,164 | 670,698 |
Contract profit | 115,535 | 119,446 |
Selling, general and administrative expenses | 82,047 | 90,332 |
Other income, net | -6,140 | -4,751 |
Other deductions, net | 10,703 | 5,312 |
Interest income | -1,403 | -1,462 |
Interest expense | 3,662 | 2,672 |
Net asbestos-related provision/(gain) | 2,008 | 2,000 |
Income from continuing operations before income taxes | 24,658 | 25,343 |
Provision for income taxes | 9,718 | 5,160 |
Income from continuing operations | 14,940 | 20,183 |
Discontinued Operations: | ' | ' |
Loss from discontinued operations before income taxes | 0 | -3,878 |
Provision for income taxes from discontinued operations | 0 | 0 |
Loss from discontinued operations | 0 | -3,878 |
Net income | 14,940 | 16,305 |
Less: Net (loss)/ income attributable to noncontrolling interests | -2,127 | 3,279 |
Net income attributable to Foster Wheeler AG | 17,067 | 13,026 |
Amounts attributable to Foster Wheeler AG: | ' | ' |
Income from continuing operations attributable to Foster Wheeler AG | 17,067 | 16,904 |
Loss from discontinued operations | 0 | -3,878 |
Net income attributable to Foster Wheeler AG | $17,067 | $13,026 |
Basic earnings per share: | ' | ' |
Income from continuing operations attributable to Foster Wheeler AG (see Note 1) | $0.17 | $0.16 |
Loss from discontinued operations attributable to Foster Wheeler AG | $0 | ($0.04) |
Net income attributable to Foster Wheeler AG | $0.17 | $0.12 |
Diluted earnings per share: | ' | ' |
Income from continuing operations attributable to Foster Wheeler AG (see Note 1 ) | $0.17 | $0.16 |
Loss from discontinued operations attributable to Foster Wheeler AG | $0 | ($0.04) |
Net income attributable to Foster Wheeler AG | $0.17 | $0.12 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ' | ' |
Net income | $14,940 | $16,305 |
Foreign currency translation adjustments: | ' | ' |
Foreign currency translation adjustments | -3,288 | -14,413 |
Tax impact | -7 | 0 |
Foreign currency translation adjustments, net of tax | -3,295 | -14,413 |
Cash flow hedges adjustments: | ' | ' |
Unrealized loss | -2,368 | -818 |
Tax impact | 820 | 208 |
Unrealized loss, net of tax | -1,548 | -610 |
Reclassification for losses included in net income (see Note 8 for further information) | 1,020 | 1,135 |
Tax impact | -347 | -288 |
Reclassification for losses included in net income, net of tax | 673 | 847 |
Total cash flow hedges adjustments, net of tax | -875 | 237 |
Pension and other postretirement benefits adjustment, net of tax: | ' | ' |
Net actuarial loss | -3,980 | 0 |
Tax impact | 498 | 0 |
Net actuarial gain/(loss), net of tax | -3,482 | 0 |
Amortization included in net periodic pension cost (see Note 6 for further information): | ' | ' |
Amortization for net actuarial loss | 4,115 | 4,664 |
Tax impact | -456 | -449 |
Amortization for net actuarial loss, net of tax | 3,659 | 4,215 |
Amortization for prior service credit | -1,445 | -1,264 |
Tax impact | 114 | 91 |
Amortization for prior service credit, net of tax | -1,331 | -1,173 |
Amortization for transition obligation | 5 | 14 |
Tax impact | 0 | 3 |
Amortization for transition obligation, net of tax | 5 | 17 |
Total pension and other postretirement benefits adjustments, net of tax | -1,149 | 3,059 |
Other comprehensive income, net of tax | -5,319 | -11,117 |
Comprehensive income | 9,621 | 5,188 |
Less: Comprehensive (loss)/income attibutable to noncontrolling interests | -2,693 | 2,492 |
Comprehensive income attributable to Foster Wheeler AG | $12,314 | $2,696 |
CONSOLIDATED_BALANCE_SHEET
CONSOLIDATED BALANCE SHEET (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash and cash equivalents | $527,867 | $556,190 |
Accounts and notes receivable, net: | ' | ' |
Trade | 715,360 | 671,770 |
Other | 60,581 | 57,262 |
Contracts in process | 201,034 | 197,232 |
Prepaid, deferred and refundable income taxes | 61,391 | 62,856 |
Other current assets | 39,070 | 38,431 |
Total current assets | 1,605,303 | 1,583,741 |
Land, buildings and equipment, net | 274,667 | 279,981 |
Restricted cash | 53,580 | 82,867 |
Notes and accounts receivable - long-term | 14,645 | 15,060 |
Investments in and advances to unconsolidated affiliates | 181,736 | 181,315 |
Goodwill | 169,377 | 169,801 |
Other intangible assets, net | 108,235 | 113,463 |
Asbestos related insurance recovery receivable | 118,711 | 120,489 |
Other assets | 148,031 | 143,848 |
Deferred tax assets | 47,710 | 49,707 |
TOTAL ASSETS | 2,721,995 | 2,740,272 |
Current Liabilities: | ' | ' |
Current installments on long-term debt | 12,696 | 12,513 |
Accounts payable | 248,442 | 282,403 |
Accrued expenses | 261,640 | 304,312 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 635,383 | 569,652 |
Income taxes payable | 36,657 | 39,078 |
Total current liabilities | 1,194,818 | 1,207,958 |
Long-term debt | 113,030 | 113,719 |
Deferred tax liabilities | 40,680 | 39,714 |
Pension, postretirement and other employee benefits | 109,077 | 111,221 |
Asbestos-related liability | 248,670 | 257,180 |
Other long-term liabilities | 206,308 | 210,651 |
Commitments and contingencies | ' | ' |
TOTAL LIABILITIES | 1,912,583 | 1,940,443 |
Temporary Equity: | ' | ' |
Non-vested share-based compensation awards subject to redemption | 10,632 | 15,664 |
TOTAL TEMPORARY EQUITY | 10,632 | 15,664 |
Equity: | ' | ' |
Registered shares: CHF 3.00 par value; authorized: 158,256,236 shares and 157,863,694 shares; conditionally authorized: 57,775,870 shares and 58,168,412 shares; issued: 106,035,442 shares and 105,642,900 shares; outstanding: 99,443,742 shares and 99,051,200 shares. | 261,278 | 259,937 |
Paid-in capital | 226,769 | 216,450 |
Retained earnings | 950,227 | 933,160 |
Accumulated other comprehensive loss | -514,070 | -509,317 |
Treasury shares (outstanding: 6,591,700 shares and 6,591,700 shares) | -150,131 | -150,131 |
TOTAL FOSTER WHEELER AG SHAREHOLDERS' EQUITY | 774,073 | 750,099 |
Noncontrolling interests | 24,707 | 34,066 |
TOTAL EQUITY | 798,780 | 784,165 |
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY | $2,721,995 | $2,740,272 |
CONSOLIDATED_BALANCE_SHEET_Par
CONSOLIDATED BALANCE SHEET- (Parenthetical) (CHF) | Mar. 31, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheet (Parenthetical) [Abstract] | ' | ' |
Registered share par value in CHF | 3 | 3 |
Registered shares authorized | 158,256,236 | 157,863,694 |
Registered shares conditionally authorized | 57,775,870 | 58,168,412 |
Registered shares issued | 106,035,442 | 105,642,900 |
Registered shares outstanding | 99,443,742 | 99,051,200 |
Treasury shares outstanding | 6,591,700 | 6,591,700 |
CONSOLIDATED_STATEMENT_OF_CHAN
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (USD $) | Total | Registered Shares [Member] | Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Shares [Member] | Total Foster Wheeler AG Shareholders' Equity [Member] | Noncontrolling Interests [Member] |
In Thousands | ||||||||
Balance at Dec. 31, 2012 | $757,393 | $269,633 | $266,943 | $835,993 | ($567,603) | ($90,976) | $713,990 | $43,403 |
Net income | 16,305 | ' | ' | 13,026 | ' | ' | 13,026 | 3,279 |
Other comprehensive income/(loss), net of tax | -11,117 | ' | ' | ' | -10,330 | ' | -10,330 | -787 |
Issuance of registered shares upon exercise of stock options | 643 | 97 | 546 | ' | ' | ' | 643 | ' |
Issuance of registered shares upon vesting of restricted awards | ' | 449 | -449 | ' | ' | ' | ' | ' |
Distributions to noncontrolling interests | -10,514 | ' | ' | ' | ' | ' | ' | -10,514 |
Share-based compensation expense | 4,992 | ' | 4,992 | ' | ' | ' | 4,992 | ' |
Excess tax shortfall related to share-based compensation | -85 | ' | -85 | ' | ' | ' | -85 | ' |
Repurchase of registered shares | -33,948 | ' | ' | ' | ' | -33,948 | -33,948 | ' |
Retirement of registered shares | ' | 0 | 0 | ' | ' | 0 | ' | ' |
Balance at Mar. 31, 2013 | 723,669 | 270,179 | 271,947 | 849,019 | -577,933 | -124,924 | 688,288 | 35,381 |
Balance at Dec. 31, 2013 | 784,165 | 259,937 | 216,450 | 933,160 | -509,317 | -150,131 | 750,099 | 34,066 |
Net income | 14,940 | ' | ' | 17,067 | ' | ' | 17,067 | -2,127 |
Other comprehensive income/(loss), net of tax | -5,319 | ' | ' | ' | -4,753 | ' | -4,753 | -566 |
Issuance of registered shares upon exercise of stock options | 1,720 | 245 | 1,475 | ' | ' | ' | 1,720 | ' |
Issuance of registered shares upon vesting of restricted awards | ' | 1,096 | -1,096 | ' | ' | ' | ' | ' |
Distributions to noncontrolling interests | -6,666 | ' | ' | ' | ' | ' | ' | -6,666 |
Share-based compensation expense | 9,649 | ' | 9,649 | ' | ' | ' | 9,649 | ' |
Excess tax shortfall related to share-based compensation | 291 | ' | 291 | ' | ' | ' | 291 | ' |
Repurchase of registered shares | 0 | ' | ' | ' | ' | 0 | 0 | ' |
Retirement of registered shares | ' | 0 | 0 | ' | ' | 0 | ' | ' |
Balance at Mar. 31, 2014 | $798,780 | $261,278 | $226,769 | $950,227 | ($514,070) | ($150,131) | $774,073 | $24,707 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net income | $14,940 | $16,305 |
Adjustments to reconcile net income to cash flows from operating activities: | ' | ' |
Depreciation and amortization | 14,315 | 15,342 |
Net non-cash asbestos-related provision | 2,008 | 2,000 |
Share-based compensation expense | 4,617 | 4,590 |
Excess tax (benefit)/shortfall related to share-based com pensation | -291 | 85 |
Deferred income tax provision | 1,079 | 4,218 |
Equity in earnings of unconsolidated affiliates, net of dividends | -4,275 | -2,023 |
Other noncash items, net | -41 | 30 |
Changes in assets and liabilities, net of effects from aquisitions: | ' | ' |
(Increase)/decrease in receivables | -45,104 | 38,631 |
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts | 60,826 | -36,132 |
Decrease in accounts payable and accrued expenses | -71,038 | -52,280 |
Net change in other current assets and liabilities | 1,530 | -11,929 |
Net change in other long-term assets and liabilities | -22,241 | -14,951 |
Net cash used in operating activities-continuing operations | -43,675 | -36,114 |
Net cash used in operating activities-discontinued operations | 0 | -331 |
Net cash used in operating activities | -43,675 | -36,445 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Payments related to acquisition of businesses, net of cash acquired | 0 | -24,895 |
Change in restricted cash | 29,285 | 17,598 |
Capital expenditures | -5,769 | -7,862 |
Return of investment from unconsolidated affiliates | 0 | 82 |
Proceeds from sale of short-term investments | 0 | 121 |
Other investing activities | 61 | 0 |
Net cash provided by/(used in) investing activities- continuing operations | 23,577 | -14,956 |
Net cash provided by investing activities- discontinued operations | 0 | 331 |
Net cash provided by/(used in) investing activities | 23,577 | -14,625 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Repurchase of shares | 0 | -33,948 |
Distributions to noncontrolling interests | -6,666 | -10,514 |
Proceeds from stock options exercised | 1,720 | 643 |
Excess tax benefit/(shortfall) related to share-based compensation | 291 | -85 |
Repayment of debt and capital lease obligations | -646 | -632 |
Net cash used in financing activities | -5,301 | -44,536 |
Effect of exchange rate changes on cash and cash equivalents | -2,924 | -11,000 |
DECREASE IN CASH AND CASH EQUIVALENTS | -28,323 | -106,606 |
Less: Increase/(decrease) in cash and cash equivalents-discontinued operations | 0 | 0 |
Decreasae in cash and equivalents-continuing operations | -28,323 | -106,606 |
Cash and cash equivalents at beginning of year | 556,190 | 582,322 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $527,867 | $475,716 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | |||||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||||
1. Summary of Significant Accounting Policies | ||||||||||||||||||
Basis of Presentation — The fiscal year of Foster Wheeler AG ends on December 31 of each calendar year. Foster Wheeler AG's fiscal quarters end on the last day of March, June and September. The fiscal years of our non-U.S. operations are the same as the parent's. The fiscal year of our U.S. operations is the 52- or 53-week annual accounting period ending on the last Friday in December. | ||||||||||||||||||
The accompanying 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 consolidated 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 year ended December 31, 2013 (“2013 Form 10-K”), filed with the Securities and Exchange Commission on February 27, 2014. The consolidated balance sheet as of December 31, 2013 was derived from the audited financial statements included in our 2013 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements. | ||||||||||||||||||
Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications also include the presentation of our former waste-to-energy business as a result of its classification as held-for-sale and, in turn, discontinued operations. Please refer to Note 14 for further information. | ||||||||||||||||||
The consolidated financial statements include the accounts of Foster Wheeler AG and all U.S. and non-U.S. subsidiaries, as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated. See “—Variable Interest Entities” below for further information related to the consolidation of variable interest entities. | ||||||||||||||||||
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 in accounting for long-term contracts including estimates of total costs, progress toward completion and customer and vendor claims, employee benefit plan obligations and share-based compensation plans. In addition, we also use estimates when accounting for uncertain tax positions and deferred taxes, asbestos liabilities and expected recoveries and when assessing goodwill for impairment, among others. | ||||||||||||||||||
Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term contracts are recorded under the percentage-of-completion method. | ||||||||||||||||||
Progress towards completion on fixed-price contracts is measured based on physical completion of individual tasks for all contracts with a value of $5,000 or greater. For contracts with a value less than $5,000, progress toward completion is measured based on the ratio of costs incurred to total estimated contract costs (the cost-to-cost method). | ||||||||||||||||||
Progress towards completion on cost-reimbursable contracts is measured based on the ratio of quantities expended to total forecasted quantities, typically man-hours. Incentives are also recognized on a percentage-of-completion basis when the realization of an incentive is assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as both operating revenues and cost of operating revenues on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs. There is no contract profit impact of flow-through costs as they are included in both operating revenues and cost of operating revenues. | ||||||||||||||||||
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. A full provision for loss contracts is made at the time the loss becomes probable regardless of the stage of completion. | ||||||||||||||||||
At any time, we have numerous contracts in progress, all of which are at various stages of completion. Accounting for revenues and profits on long-term contracts requires estimates of total contract costs and estimates of progress toward completion to determine the extent of revenue and profit recognition. These estimates may be revised as additional information becomes available or as specific project circumstances change. We review all of our material contracts on a monthly basis and revise our estimates as appropriate for developments such as earning project incentive bonuses, incurring or expecting to incur 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 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. | ||||||||||||||||||
Changes in estimated final contract revenues and costs can either increase or decrease the final estimated contract profit. In the period in which a change in estimate is recognized, the cumulative impact of that change is recorded based on progress achieved through the period of change. The following table summarizes the number of separate projects that experienced final estimated contract profit revisions with an impact on contract profit in excess of $1,000 relating to the revaluation of work performed in prior periods: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Number of separate projects | 6 | 11 | ||||||||||||||||
Net increase in contract profit from the regular | ||||||||||||||||||
revaluation of final estimated contract profit revisions | $ | 13,200 | $ | 19,000 | ||||||||||||||
Please see Note 12 for further information related to changes in final estimated contract profit and the impact on business segment results. | ||||||||||||||||||
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 as additional contract revenue if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. These 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, which can include amounts from unapproved change orders when the two requirements described above are met. Unapproved change orders or similar items subject to uncertainty that do not meet the two requirements described above are expensed without the recognition of additional contract revenue. Costs attributable to claims are treated as costs of contract performance as incurred and are recorded in contracts in process. Our consolidated financial statements included commercial claims of $6,600 and $4,500 as of March 31, 2014 and December 31, 2013, respectively, of which substantially all costs had been incurred as of March 31, 2014 and December 31, 2013. | ||||||||||||||||||
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. In the event that we defer pre-contract costs and we are not successful in obtaining the contract, we write off the deferred costs through our consolidated statement of operations in the period when we no longer assess recoverability of such costs as probable. Deferred pre-contract costs were inconsequential as of March 31, 2014 and December 31, 2013. | ||||||||||||||||||
Certain special-purpose subsidiaries in our Global Power Group business segment are reimbursed by customers for their costs of building and operating certain facilities over the lives of the corresponding service contracts. Depending on the specific legal rights and obligations under these arrangements, in some cases those reimbursements are treated as operating revenues at gross value and other cases as a reduction of cost. | ||||||||||||||||||
Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. We assess the need for an allowance for doubtful accounts on a project-by-project basis, which includes the consideration of security instruments that provide us protection in the event of non-payment. When there is a risk of non-payment related to customer credit risk, we record an allowance for doubtful accounts. Because of the nature of our customer base and our rigorous customer credit risk assessment process prior to entering into contracts, the level of our allowance for doubtful accounts is typically a very small percentage of our gross accounts receivable balance. To the extent that there is a risk of non-payment related to commercial or performance issues, we record an allowance against the valuation of contract work in progress within the contract. | ||||||||||||||||||
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, which we refer to as retention receivables. Final payment of retention receivables 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 consolidated balance sheet. We have not recorded a provision for the outstanding retention receivable balances as of March 31, 2014 or December 31, 2013. | ||||||||||||||||||
Trade accounts receivable are continually evaluated for collectability. 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. | ||||||||||||||||||
Variable Interest Entities — We sometimes form separate legal entities such as corporations, partnerships and limited liability companies in connection with the execution of a single contract or project. Upon formation of each separate legal entity, we perform an evaluation to determine whether the new entity is a variable interest entity, or VIE, and whether we are the primary beneficiary of the new entity, which would require us to consolidate the new entity in our financial results. We reassess our initial determination on whether the entity is a VIE upon the occurrence of certain events and whether we are the primary beneficiary as outlined in current accounting guidelines. If the entity is not a VIE, we determine the accounting for the entity under the voting interest accounting guidelines. | ||||||||||||||||||
An entity is determined to be a VIE if either (a) the total equity investment is not sufficient for the entity to finance its own activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (such as the ability to make decisions through voting or other rights or the obligation to absorb losses or the right to receive benefits), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb losses of the entity and/or their rights to receive benefits of the entity, and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. | ||||||||||||||||||
As of March 31, 2014 and December 31, 2013, we participated in certain entities determined to be VIEs, including a gas-fired cogeneration facility in Martinez, California and a refinery/electric power generation project in Chile. We consolidate the operations of the Martinez project while we record our participation in the project in Chile on the equity method of accounting. | ||||||||||||||||||
Please see Note 3 for further information regarding our participation in these projects. | ||||||||||||||||||
Fair Value Measurements — Fair value is defined 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. Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, 820-10 defines fair value, establishes a three level fair value hierarchy that prioritizes the inputs used to measure fair value and provides guidance on required disclosures about fair value measurements. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. | ||||||||||||||||||
Our financial assets and liabilities that are recorded at fair value on a recurring basis consist primarily of the assets or liabilities arising from derivative financial instruments and defined benefit pension plan assets. See Note 8 for further information regarding our derivative financial instruments. | ||||||||||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value: | ||||||||||||||||||
Financial instruments valued independent of the fair value hierarchy: | ||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash — The carrying value of our cash, cash equivalents and restricted cash approximates fair value because of the demand nature of many of our deposits or short-term maturity of these instruments. | ||||||||||||||||||
Financial instruments valued within the fair value hierarchy: | ||||||||||||||||||
Long-term Debt — We estimate the fair value of our long-term debt (including current installments) based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities using level 2 inputs. | ||||||||||||||||||
Foreign Currency Forward Contracts — We estimate the fair value of foreign currency forward contracts by obtaining quotes from financial institutions or market transactions in either the listed or over-the-counter markets. Our estimate of the fair value of foreign currency forward contracts also includes an assessment of non-performance by our counterparties. We further corroborate the valuations with observable market data using level 2 inputs. | ||||||||||||||||||
Interest Rate Swaps — We estimate the fair value of our interest rate swaps based on quotes obtained from financial institutions, which we further corroborate with observable market data using level 2 inputs. | ||||||||||||||||||
Defined Benefit Pension Plan Assets — We estimate the fair value of investments in equity securities at each year-end based on quotes obtained from financial institutions. The fair value of investments in commingled funds, invested primarily in debt and equity securities, is based on the net asset values communicated by the respective asset manager. We further corroborate the above valuations with observable market data using level 1 and 2 inputs. Additionally, we hold investments in private investment funds that are valued at net asset value as communicated by the asset manager using level 2 or 3 unobservable market data inputs. | ||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||
Fair value measurements: | ||||||||||||||||||
Assets: | ||||||||||||||||||
Assets measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,330 | $ | - | $ | - | $ | 7,361 | $ | - | ||||||
Assets measured at fair value on a non-recurring basis: | ||||||||||||||||||
Investment in an unconsolidated affiliate | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 35,096 | ||||||
Liabilities: | ||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,512 | $ | - | $ | - | $ | 2,405 | $ | - | ||||||
Interest rate swap contracts | - | 8,757 | - | - | 7,866 | - | ||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | - | $ | 10,269 | $ | - | $ | - | $ | 10,271 | $ | - | ||||||
Retirement of Shares under Share Repurchase Program — Under Swiss law, the cancellation of shares previously repurchased under our share repurchase program must be approved by our shareholders. Repurchased shares remain as treasury shares on our balance sheet until cancellation. | ||||||||||||||||||
Any repurchases will be made at our discretion 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 shares. The program has no expiration date and may be suspended or discontinued at any time. | ||||||||||||||||||
All treasury shares are carried at cost on the consolidated balance sheet until the cancellation of the shares has been approved by our shareholders and the cancellation is registered with the commercial register of the Canton of Zug in Switzerland. Upon the effectiveness of the cancellation of the shares, the cost of the shares cancelled will be removed from treasury shares on the consolidated balance sheet, the par value of the cancelled shares will be removed from registered shares on the consolidated balance sheet, and the excess of the cost of the treasury shares above par value will be removed from paid-in capital on the consolidated balance sheet. | ||||||||||||||||||
Once repurchased, treasury shares are no longer considered outstanding, which results in a reduction to the weighted-average number of shares outstanding during the reporting period when calculating earnings per share, as described below. | ||||||||||||||||||
Earnings per Share — Basic earnings per share amounts have been computed based on the weighted-average number of shares outstanding during the reporting period. | ||||||||||||||||||
Diluted earnings per share amounts have been based on the combination of the weighted-average number of shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options and the non-vested portion of restricted stock units and performance-based restricted stock units (collectively, “restricted awards”) to the extent such securities are dilutive. | ||||||||||||||||||
In profitable periods, outstanding stock options have a dilutive effect under the treasury stock method when the average share price for the period exceeds the assumed proceeds from the exercise of the option. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the consolidated statement of operations, and any tax benefits that would be recorded in paid-in capital when the option is exercised. Under the treasury stock method, the assumed proceeds are assumed to be used to repurchase 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 share from continuing operations were as follows: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income from continuing operations attributable to Foster Wheeler AG | $ | 17,067 | $ | 16,904 | ||||||||||||||
Basic weighted-average number of shares outstanding | 99,147,429 | 104,386,669 | ||||||||||||||||
Effect of dilutive securities | 1,263,233 | 253,330 | ||||||||||||||||
Diluted weighted-average number of shares outstanding | 100,410,662 | 104,639,999 | ||||||||||||||||
Income from continuing operations per share: | ||||||||||||||||||
Basic | $ | 0.17 | $ | 0.16 | ||||||||||||||
Diluted | $ | 0.17 | $ | 0.16 | ||||||||||||||
The following table summarizes share-based compensation awards not included in the calculation of diluted earnings per share as the assumed proceeds from those awards, on a per share basis, were greater than the average share price for the period, which would result in an antidilutive effect on diluted earnings per share: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Stock options | 527,547 | 1,574,710 | ||||||||||||||||
Performance-based restricted share units | 432,445 | 1,132,649 | ||||||||||||||||
Pending Exchange Offer and Our Acquisition by AMEC plc – On February 13, 2014, we entered into an Implementation Agreement (the “Implementation Agreement”) with AMEC plc (“AMEC”) relating to the acquisition of all of the issued and to be issued registered shares, par value CHF 3.00 per share, of Foster Wheeler AG (the “FW shares”) by AMEC. On the terms and subject to the conditions of the Implementation Agreement, AMEC will commence an exchange offer (the “Offer”) to acquire all of the FW shares, pursuant to which each validly tendered FW share will be exchanged for a combination (subject to election by each Foster Wheeler shareholder as described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014) of (a) $16.00 in cash plus (b) 0.8998 ordinary shares, par value £0.50 per share, of AMEC ("AMEC shares") or, at the election of such holder, American Depositary Shares representing such number of AMEC shares. | ||||||||||||||||||
The closing of the Offer is subject to, among other things, approval by our shareholders of certain amendments to our articles of association to remove certain transfer restrictions and certain voting limitations with respect to the FW shares. | ||||||||||||||||||
For a full description of the Offer, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014. | ||||||||||||||||||
Proposed Dividend – On February 26, 2014, our Board of Directors approved a proposal to our shareholders for a one-time dividend of $0.40 per share. We intend to ask our shareholders to approve this dividend at our Annual General Meeting on May 7, 2014 and, subject to shareholder approval, this dividend will be paid shortly after our Annual General Meeting. This dividend is not linked to, and not conditional on, the closing of the Offer. The covenants of our senior unsecured credit agreement do not limit our ability to pay this proposed dividend and we expect that there will be no Swiss withholding taxes on the dividend. |
Business_Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2014 | |
Business Combinations [Abstract] | ' |
Business Combinations | ' |
2. Business Combinations | |
2014 Acquisition Activity | |
In April 2014, we acquired certain assets of the Siemens Environmental Systems and Services (“SESS”) business from Siemens Energy, Inc. in a cash transaction for a nominal amount. The SESS business supplies and services clean air technologies for use in power plants and industrial facilities with locations in Pittsburgh, Pennsylvania and Branchburg, New Jersey. The assets, liabilities and results of operations from this acquisition will be included within our Global Power Group business segment. | |
In March 2014, we entered into a merger implementation agreement with MDM Engineering Group Limited (“MDM Engineering”) to acquire all of the ordinary shares and options of MDM Engineering in a cash transaction valued at approximately $109,000 (the “MDM Transaction”). The MDM Transaction is subject to MDM Engineering shareholder approval and other closing conditions. The MDM Transaction closing is expected to occur in the latter half of 2014. MDM Engineering Group is based in South Africa and is a minerals process and project management company focused on the mining industry. The company provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. The assets, liabilities and results of operations of this business will be included within our Global Engineering and Construction Group (“Global E&C Group”) business segment. | |
2013 Acquisition Activity | |
In June 2013, we acquired all of the outstanding shares of a privately held upstream consultancy business located in the United Kingdom and additional related assets in the Middle East. This acquired business specializes in field development and project decision support, focused on the evaluation and implementation of oil and gas field developments covering greenfield and brownfield assets. We paid cash consideration net of cash acquired of £6,000 (approximately $9,300 based on the exchange rates in effect on the payment dates). The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of £3,000 (approximately $5,000 based on the exchange rate in effect on March 31, 2014), depending on the acquired business' performance, as defined in the sale and purchase agreement, over a period of approximately 3 and a half years subsequent to the acquisition date. Any amounts recognized under the earnout will be reported as compensation expense in periods subsequent to the acquisition date rather than as part of the purchase price for the business. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $4,465 and other intangible assets of $5,307 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment. | |
Also in June 2013, we acquired all of the outstanding shares of a privately held engineering and project management business located in Mexico with experience in both offshore and onshore upstream oil and gas, downstream oil and gas and power projects. We paid cash consideration net of cash acquired of approximately $15,700. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $18,143 and other intangible assets of $7,100 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment. | |
During our U.S. operations' fiscal first quarter of 2013, we acquired all of the outstanding shares of a privately held U.S.-based business that specializes in the management of construction and commissioning of pharmaceutical and biotech facilities and which also has the capabilities to manage the full engineering, procurement and construction of such facilities. In addition, the acquired business has the ability to provide modular project delivery services on a worldwide basis through its participation in a business partnership. We paid cash consideration net of cash acquired of approximately $25,100, which includes a working capital adjustment paid subsequent to the three months ended March 31, 2013. The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of approximately $6,600, depending on the acquired business' performance, as defined in the sale and purchase agreement, over a period of approximately 5 years subsequent to the acquisition date. Any amounts recognized under the earnout will be reported as compensation expense in periods subsequent to the acquisition date rather than as part of the purchase price for the business. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. As a result of the purchase price allocation, we recognized goodwill of $10,571 and other intangible assets of $13,980 related to this acquisition. The assets, liabilities and results of operations of the acquired business are included within our Global E&C Group business segment. |
Investments
Investments | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Investments | ' | |||||||||||
Investments | ' | |||||||||||
3. Investments | ||||||||||||
Investment in Unconsolidated Affiliates | ||||||||||||
We own a noncontrolling interest in two electric power generation projects, one waste-to-energy project and one wind farm project, which are all located in Italy, and in a refinery/electric power generation project, which is located in Chile. We also own a 50% noncontrolling interest in a project in Italy which generates earnings from royalty payments linked to the price of natural gas. Based on the outstanding equity interests of these entities, we own 41.65% of each of the two electric power generation projects in Italy, 39% of the waste-to-energy project and 50% of the wind farm project. We have a notional 85% equity interest in the project in Chile; however, we are not the primary beneficiary as a result of participation rights held by the minority shareholder. In determining that we are not the primary beneficiary, we considered the minority shareholder's right to approve activities of the project that most significantly impact the project's economic performance which include the right to approve or reject the annual financial (capital and operating) budget and the annual operating plan, the right to approve or reject the appointment of the general manager and senior management, and approval rights with respect to capital expenditures beyond those included in the annual budget. | ||||||||||||
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) based on where the projects are located: | ||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Italy | Chile | Italy | Chile | |||||||||
Balance Sheet Data: | ||||||||||||
Current assets | $ | 171,591 | $ | 74,166 | $ | 156,844 | $ | 66,867 | ||||
Other assets (primarily buildings and equipment) | 250,729 | 86,532 | 259,392 | 88,936 | ||||||||
Current liabilities | 112,781 | 26,086 | 108,769 | 25,643 | ||||||||
Other liabilities (primarily long-term debt) | 149,785 | 14,482 | 149,578 | 14,482 | ||||||||
Net assets | $ | 159,754 | $ | 120,130 | $ | 157,889 | $ | 115,678 | ||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Italy | Chile | Italy | Chile | |||||||||
Income Statement Data: | ||||||||||||
Total revenues | $ | 33,279 | $ | 20,105 | $ | 33,009 | $ | 17,593 | ||||
Gross profit | 15,450 | 8,718 | 196 | 9,215 | ||||||||
Income/(loss) before income taxes | 7,641 | 5,566 | -1,653 | 8,885 | ||||||||
Net earnings/(loss) | 2,365 | 4,452 | -1,271 | 6,868 | ||||||||
Our investment in these unconsolidated affiliates is recorded within investments in and advances to unconsolidated affiliates on the consolidated balance sheet and our equity in the net earnings of these unconsolidated affiliates is recorded within other income, net on the consolidated statement of operations. The investments and equity earnings of our unconsolidated affiliates in Italy and Chile are included in our Global E&C Group and Global Power Group business segments, respectively. | ||||||||||||
Our consolidated financial statements reflect the following amounts related to our unconsolidated affiliates in Italy and Chile: | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Equity in the net earnings of unconsolidated affiliates | $ | 3,921 | $ | 4,104 | ||||||||
Distributions from equity affiliates | $ | - | $ | 1,943 | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Investments in unconsolidated affiliates | $ | 154,258 | $ | 150,558 | ||||||||
Our equity earnings from our projects in Italy were $1,161 in the first three months of 2014 and were inconsequential in the first three months of 2013. | ||||||||||||
Our equity earnings from our project in Chile were $2,760 and $4,227 in the first three months of 2014 and 2013, respectively. The decrease in equity earnings in the first three months of 2014, compared to the same period in 2013, was primarily driven by a reversal of a risk contingency in the first quarter of 2013 associated with the insurance proceeds received by our project in Chile in connection with its 2010 earthquake loss. Excluding this item, equity earnings would have shown an increase when comparing the first three months of 2014 to the same period in 2013. | ||||||||||||
We have guaranteed certain performance obligations of our project in Chile. We have a contingent obligation, which is measured annually based on the operating results of our project in Chile for the preceding year and is shared equally with our minority interest partner. We did not have a current payment obligation under this guarantee as of March 31, 2014 or December 31, 2013. | ||||||||||||
We also have a wholly-owned subsidiary that provides operations and maintenance services to our project in Chile. We record the fees for operations and maintenance services in operating revenues on our consolidated statement of operations and the corresponding receivable in trade accounts and notes receivable on our consolidated balance sheet. | ||||||||||||
Our consolidated financial statements include the following balances related to our project in Chile: | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Fees for operations and maintenance services (included in operating revenues) | $ | 2,728 | $ | 2,804 | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Receivable from our unconsolidated affiliate in Chile (included in trade receivables) | $ | 13,904 | $ | 7,866 | ||||||||
We also have guaranteed the performance obligations of our wholly-owned subsidiary under the operations and maintenance agreement governing our project in Chile. 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. | ||||||||||||
Other Investments | ||||||||||||
We are the majority equity partner and general partner of a gas-fired cogeneration project in Martinez, California, which we have determined to be a VIE as of March 31, 2014 and December 31, 2013. We are the primary beneficiary of the VIE, since we have the power to direct the activities that most significantly impact the VIE's performance. These activities include the operations and maintenance of the facilities. Accordingly, as the primary beneficiary of the VIE, we have consolidated this entity. The aggregate net assets of this entity are presented below. | ||||||||||||
Balance Sheet Data (excluding intercompany balances): | 31-Mar-14 | 31-Dec-13 | ||||||||||
Current assets | $ | 5,395 | $ | 5,897 | ||||||||
Other assets (primarily buildings and equipment) | 35,084 | 36,118 | ||||||||||
Current liabilities | 2,637 | 3,024 | ||||||||||
Other liabilities | 4,657 | 4,819 | ||||||||||
Net assets | $ | 33,185 | $ | 34,172 |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||
4. Goodwill and Other Intangible Assets | |||||||||||||||||||
We have tracked accumulated goodwill impairments since the beginning of fiscal year 2002, our date of adoption of the accounting guidelines related to the assessment of goodwill for impairment. There were no accumulated goodwill impairment losses since that date. The following table provides our net carrying amount of goodwill by geographic region in which our reporting units are located: | |||||||||||||||||||
Global E&C Group | Global Power Group | ||||||||||||||||||
Geographic Regions: | 31-Mar-14 | 31-Dec-13 | 31-Mar-14 | 31-Dec-13 | |||||||||||||||
North America | $ | 83,845 | $ | 84,447 | $ | 4,266 | $ | 4,266 | |||||||||||
Asia | 786 | 761 | - | - | |||||||||||||||
Europe | 6,835 | 6,787 | 73,060 | 72,959 | |||||||||||||||
Middle East | 585 | 581 | - | - | |||||||||||||||
Total | $ | 92,051 | $ | 92,576 | $ | 77,326 | $ | 77,225 | |||||||||||
The changes in each of the regions during the three months ended March 31, 2014 were the result of the impact of foreign currency translation adjustments. | |||||||||||||||||||
The following table sets forth amounts relating to our identifiable intangible assets: | |||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||
Patents | $ | 41,539 | $ | -34,973 | $ | 6,566 | $ | 41,526 | $ | -34,477 | $ | 7,049 | |||||||
Trademarks | 66,322 | -34,682 | 31,640 | 66,320 | -34,113 | 32,207 | |||||||||||||
Customer relationships, | |||||||||||||||||||
pipeline and backlog | 93,824 | -28,475 | 65,349 | 95,199 | -25,911 | 69,288 | |||||||||||||
Technology | 6,897 | -2,217 | 4,680 | 6,887 | -1,968 | 4,919 | |||||||||||||
Total | $ | 208,582 | $ | -100,347 | $ | 108,235 | $ | 209,932 | $ | -96,469 | $ | 113,463 | |||||||
As of March 31, 2014, the net carrying amounts of our identifiable intangible assets were $44,103 for our Global Power Group and $64,132 for our Global E&C Group. Amortization expense related to identifiable intangible assets is recorded within cost of operating revenues on the consolidated statement of operations. Amortization expense related to assets other than identifiable intangible assets was not material in the three months ended March 31, 2014 and 2013. | |||||||||||||||||||
The following table details amortization expense related to identifiable intangible assets by period: | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Amortization expense | $ | 4,108 | $ | 4,054 | |||||||||||||||
Approximate full year amortization expense for years: | |||||||||||||||||||
2014 | $ | 16,300 | |||||||||||||||||
2015 | 11,900 | ||||||||||||||||||
2016 | 9,600 | ||||||||||||||||||
2017 | 9,200 | ||||||||||||||||||
2018 | 9,000 |
Borrowings
Borrowings | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Borrowings [Abstract] | ' | |||||||||||||||||||
Borrowings | ' | |||||||||||||||||||
5. Borrowings | ||||||||||||||||||||
The following table shows the components of our long-term debt: | ||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||||
Current | Long-term | Total | Current | Long-term | Total | |||||||||||||||
Capital Lease Obligations | $ | 3,212 | $ | 50,593 | $ | 53,805 | $ | 3,040 | $ | 51,359 | $ | 54,399 | ||||||||
Special-Purpose Limited Recourse Project Debt: | ||||||||||||||||||||
FW Power S.r.l. | 7,444 | 55,799 | 63,243 | 7,433 | 55,722 | 63,155 | ||||||||||||||
Energia Holdings, LLC at 11.443% interest, | ||||||||||||||||||||
due April 15, 2015 | 2,040 | 5,355 | 7,395 | 2,040 | 5,355 | 7,395 | ||||||||||||||
Subordinated Robbins Facility Exit Funding Obligations: | ||||||||||||||||||||
1999C Bonds at 7.25% interest, due October 15, 2024 | - | 1,283 | 1,283 | - | 1,283 | 1,283 | ||||||||||||||
Total | $ | 12,696 | $ | 113,030 | $ | 125,726 | $ | 12,513 | $ | 113,719 | $ | 126,232 | ||||||||
Estimated fair value | $ | 140,130 | $ | 139,912 | ||||||||||||||||
Senior Credit Agreement — On August 3, 2012, we entered into a new five-year senior unsecured credit agreement, which replaced our amended and restated senior unsecured credit agreement from July 2010. Our senior credit agreement provides for an unsecured revolving line of credit of $750,000 and contains an increase option permitting us, subject to certain requirements, to arrange with existing lenders and/or new lenders to provide up to an aggregate of $300,000 in additional commitments. During the term of this senior credit agreement, we may request, subject to certain requirements, up to two one-year extensions of the contractual termination date. | ||||||||||||||||||||
We can issue up to $750,000 under the letter of credit portion of the facility. Letters of credit issued under our senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in our corporate credit ratings, as defined in the senior credit agreement. Based on our current credit ratings, letter of credit fees for performance and non-performance letters of credit issued under our senior credit agreement are 0.75% and 1.50% per annum of the outstanding amount, respectively, excluding a nominal fronting fee. We also have the option to use up to $250,000 of the $750,000 for revolving borrowings at a rate equal to adjusted LIBOR, as defined in the senior credit agreement, plus 1.50%, subject also to the performance pricing noted above. | ||||||||||||||||||||
Fees and expenses incurred in conjunction with the execution of our senior credit agreement were approximately $4,000 and, along with a portion of the remaining unamortized fees from our July 2010 agreement, are being amortized to expense over the five-year term of the agreement, which commenced in the third quarter of 2012. | ||||||||||||||||||||
Our senior credit agreement contains various customary restrictive covenants. In addition, our senior credit agreement contains financial covenants relating to leverage and interest coverage ratios. Our total leverage ratio compares total indebtedness to EBITDA, as defined in the credit agreement, and our total interest coverage ratio compares EBITDA, as defined in the credit agreement, to interest expense. Both the leverage and interest coverage ratios are measured quarterly. In addition, the leverage ratio is measured as of any date of determination for certain significant events. All such terms are defined in our senior credit agreement. We have been in compliance with all financial covenants and other provisions of our senior credit agreement during the three months ended March 31, 2014 and 2013. | ||||||||||||||||||||
We had approximately $304,500 and $253,900 of letters of credit outstanding under our senior credit agreement as of March 31, 2014 and December 31, 2013, respectively. The letter of credit fees under our senior credit agreement as of March 31, 2014 and December 31, 2013 ranged from 0.75% to 1.50% of the outstanding amount, excluding fronting fees. There were no funded borrowings outstanding under our senior credit agreement as of March 31, 2014 and December 31, 2013. |
Pensions_and_Other_Postretirem
Pensions and Other Postretirement Benefits | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Pensions and Other Postretirement Benefits [Abstract] | ' | ||||||||||||
Pensions and Other Postretirement Benefits | ' | ||||||||||||
6. Pensions and Other Postretirement Benefits | |||||||||||||
We have defined benefit pension plans in the United States, or U.S., the United Kingdom, or U.K., Canada, Finland, France, India and South Africa, and we have other postretirement benefit plans, which we refer to as OPEB plans, for health care and life insurance benefits in the U.S. and Canada. | |||||||||||||
Defined Benefit Pension Plans — Our defined benefit pension plans, or pension plans, cover certain full-time employees. Under the pension plans, retirement benefits are primarily a function of both years of service and level of compensation. The U.S. pension plans, which are closed to new entrants and additional benefit accruals, and the Canada, Finland, France and India pension plans are non-contributory. The U.K. pension plan, which is closed to new entrants and additional benefit accruals, and the South Africa pension plan are both contributory plans. | |||||||||||||
Based on the minimum statutory funding requirements for 2014, we are not required to make any mandatory contributions to our U.S. pension plans. The following table provides details on 2014 mandatory contribution activity for our non-U.S. pension plans: | |||||||||||||
Contributions in the three months ended March 31, 2014 | $ | 5,400 | |||||||||||
Remaining contributions expected for the year 2014 | 17,900 | ||||||||||||
Contributions expected for the year 2014 | $ | 23,300 | |||||||||||
We did not make any discretionary contributions during the first three months of 2014; however, we may elect to make discretionary contributions to our U.S. and/or non-U.S. pension plans during the remainder of 2014. | |||||||||||||
Other Postretirement Benefit Plans — Certain employees in the U.S. and Canada may become eligible for other postretirement benefit plans such as health care and life insurance benefits if they qualify for and commence normal or early retirement pension benefits as defined in the U.S. and Canada pension plans while working for us. Additionally, one of our subsidiaries in the U.S. also has a benefit plan which provides coverage for an employee's beneficiary upon the death of the employee. This plan has been closed to new entrants since 1988. | |||||||||||||
Components of net periodic benefit cost/(credit) include: | |||||||||||||
Defined Benefit Pension Plans | OPEB Plans | ||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net periodic benefit (credit)/cost: | |||||||||||||
Service cost | $ | 298 | $ | 300 | $ | 12 | $ | 18 | |||||
Interest cost | 14,020 | 12,829 | 588 | 859 | |||||||||
Expected return on plan assets | -18,127 | -16,291 | - | - | |||||||||
Amortization of loss/(gain) | 4,144 | 4,474 | -29 | 190 | |||||||||
Amortization of prior service credit | -571 | -390 | -874 | -874 | |||||||||
Amortization of transition obligation | 5 | 14 | - | - | |||||||||
Net periodic benefit (credit)/cost | $ | -231 | $ | 936 | $ | -303 | $ | 193 | |||||
The components of net periodic benefit (credit)/cost are recognized within cost of operating revenues and selling, general and administrative expenses on our consolidated statement of operations. Please refer to Note 1 for further discussion on the timing of when items in cost of operating revenues are recognized on our consolidated statement of operations under our accounting policy for revenue recognition on long-term contracts, which utilizes the percentage-of-completion method. The offsetting effect of the amortization components of net periodic benefit cost listed above are included in other comprehensive income on our consolidated statement of comprehensive income along with their corresponding tax effects. | |||||||||||||
Also refer to Note 10 for the related tax effect on pension and other postretirement benefit adjustments that are recognized in other comprehensive loss. | |||||||||||||
Guarantees_and_Warranties
Guarantees and Warranties | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
Guarantees and Warranties [Abstract] | ' | |||||
Guarantees and Warranties | ' | |||||
7. 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 breach of covenants, breach of representations and warranties, as well as potential exposure for retained liabilities, environmental matters and third party claims 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; however many of our indemnification obligations, including for environmental matters, are capped. Historically, our payments under these indemnification obligations have not had a significant effect on our business, financial condition, results of operations or cash flows. We believe that if we were to incur a loss related to any of these matters, such loss would not have a significant effect on our business, financial condition, results of operations or cash flows. | ||||||
We maintain liabilities for environmental matters for properties owned and for properties covered under the indemnification obligations described above for businesses and/or assets that we previously owned and sold to third parties. As of March 31, 2014 and December 31, 2013, the carrying amounts of our environmental liabilities were $6,700 and $6,800, respectively. | ||||||
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. | ||||||
Three Months Ended March 31, | ||||||
Warranty Liability: | 2014 | 2013 | ||||
Balance at beginning of year | $ | 73,500 | $ | 90,100 | ||
Accruals | 5,500 | 6,100 | ||||
Settlements | -1,600 | -2,000 | ||||
Adjustments to provisions* | -5,500 | -3,700 | ||||
Foreign currency translation | 900 | -2,200 | ||||
Balance at end of period | $ | 72,800 | $ | 88,300 | ||
_________________ | ||||||
Adjustments to the provisions represent reversals of warranty provisions that are no longer required. | ||||||
We are contingently liable under standby letters of credit, bank guarantees and surety bonds, totaling $1,036,500 and $960,500 as of March 31, 2014 and December 31, 2013, respectively, primarily for guarantees of our performance on projects currently in execution or under warranty. These amounts include the standby letters of credit issued under our senior unsecured credit agreement discussed in Note 5 and under other facilities worldwide. No material claims have been made against these guarantees, and based on our experience and current expectations, we do not anticipate any material claims. | ||||||
We have also guaranteed certain performance obligations in a refinery/electric power generation project located in Chile in which we hold a noncontrolling interest. See Note 3 for further information. | ||||||
Derivative_Financial_Instrumen
Derivative Financial Instruments | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||
Derivative Financial Instruments | ' | ||||||||||||||||||
8. Derivative Financial Instruments | |||||||||||||||||||
We are exposed to certain risks relating to our ongoing business operations. The risks managed by using derivative financial instruments relate primarily to foreign currency exchange rate risk and, to a significantly lesser extent, interest rate risk. Derivative financial instruments held by our consolidated entities are recognized as assets or liabilities at fair value on our consolidated balance sheet. Our proportionate share of the fair value of derivative financial instruments held by our equity method investees is included in investments in and advances to unconsolidated affiliates on our consolidated balance sheet. The fair values of derivative financial instruments held by our consolidated entities were as follows: | |||||||||||||||||||
Fair Values of Derivative Financial Instruments | |||||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance Sheet | March 31, | December 31, | Balance Sheet | March 31, | December 31, | ||||||||||||||
Location | 2014 | 2013 | Location | 2014 | 2013 | ||||||||||||||
Derivatives designated as | |||||||||||||||||||
hedging instruments: | |||||||||||||||||||
Interest rate swap | |||||||||||||||||||
contracts | Other assets | $ | - | $ | - | Other long-term liabilities | $ | 8,757 | $ | 7,866 | |||||||||
Derivatives not designated | |||||||||||||||||||
as hedging instruments: | |||||||||||||||||||
Foreign currency | Contracts in process or | Contracts in process or | |||||||||||||||||
forward contracts | billings in excess of costs | billings in excess of costs | |||||||||||||||||
and estimated earnings on | and estimated earnings on | ||||||||||||||||||
uncompleted contracts | 1,266 | 7,157 | uncompleted contracts | 1,406 | 2,018 | ||||||||||||||
Foreign currency | |||||||||||||||||||
forward contracts | Other accounts receivable | 64 | 204 | Accounts payable | 106 | 387 | |||||||||||||
Total derivatives | $ | 1,330 | $ | 7,361 | $ | 10,269 | $ | 10,271 | |||||||||||
Foreign Currency Exchange Rate Risk | |||||||||||||||||||
We operate on a worldwide basis with operations that subject us to foreign currency exchange rate risk mainly relative to the British pound, Chinese yuan, Euro and U.S. dollar as of March 31, 2014. Under our risk management policies, we do not hedge translation risk exposure. All activities of our affiliates are recorded in their functional currency, which is typically the local currency in the country of domicile of the affiliate. In the ordinary course of business, our affiliates enter into transactions in currencies other than their respective functional currencies. We seek to minimize the resulting foreign currency transaction risk by contracting for the procurement of goods and services in the same currency as the sales value of the related long-term contract. We further mitigate the risk through the use of foreign currency forward contracts to hedge the exposed item, such as anticipated purchases or revenues, back to their functional currency. | |||||||||||||||||||
The notional amount of our foreign currency forward contracts provides one measure of our transaction volume outstanding as of the balance sheet date. As of March 31, 2014, we had a total gross notional amount, measured in U.S. dollar equivalent, of approximately $277,200 related to foreign currency forward contracts. Amounts ultimately realized upon final settlement of these financial instruments, along with the gains and losses on the underlying exposures within our long-term contracts, will depend on actual market exchange rates during the remaining life of the instruments. The contract maturity dates range from the remainder of 2014 through 2016. | |||||||||||||||||||
We are exposed to credit loss in the event of non-performance by the counterparties. These counterparties are commercial banks that are primarily rated “BBB+” or better by S&P (or the equivalent by other recognized credit rating agencies). | |||||||||||||||||||
Increases in the fair value of the currencies sold forward result in losses while increases in the fair value of the currencies bought forward result in gains. For foreign currency forward contracts used to mitigate currency risk on our projects, the gain or loss from the portion of the mark-to-market adjustment related to the completed portion of the underlying project is included in cost of operating revenues at the same time as the underlying foreign currency exposure occurs. The gain or loss from the remaining portion of the mark-to-market adjustment, specifically the portion relating to the uncompleted portion of the underlying project is reflected directly in cost of operating revenues in the period in which the mark-to-market adjustment occurs. We also utilize foreign currency forward contracts to mitigate non-project related currency risks, which are recorded in other deductions, net. | |||||||||||||||||||
The gain or loss from the remaining uncompleted portion of our projects and other non-project related transactions were as follows: | |||||||||||||||||||
Amount of Gain/(Loss) | |||||||||||||||||||
Location of Gain/(Loss) | Recognized in Income on Derivatives | ||||||||||||||||||
Derivatives Not Designated as | Recognized | Three Months Ended March 31, | |||||||||||||||||
Hedging Instruments | in Income on Derivatives | 2014 | 2013 | ||||||||||||||||
Foreign currency forward contracts | Cost of operating revenues | $ | -828 | $ | -7,320 | ||||||||||||||
Foreign currency forward contracts | Other deductions, net | 116 | -1,276 | ||||||||||||||||
Total | $ | -712 | $ | -8,596 | |||||||||||||||
The mark-to-market adjustments on foreign currency forward exchange contracts for these unrealized gains or losses are primarily recorded in either contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts on the consolidated balance sheet. | |||||||||||||||||||
During the three months ended March 31, 2014 and 2013, we included net cash inflows/(outflows) on the settlement of derivatives of $3,711 and $(889), 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 on the consolidated statement of cash flows. | |||||||||||||||||||
Interest Rate Risk | |||||||||||||||||||
We use interest rate swap contracts to manage interest rate risk associated with a portion of our variable rate special-purpose limited recourse project debt. The aggregate notional amount of the receive-variable/pay-fixed interest rate swaps for our consolidated entities was $56,900 as of March 31, 2014. | |||||||||||||||||||
Upon entering into the swap contracts, we designate the interest rate swaps as cash flow hedges. 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 interest rate swap contracts on our 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 other comprehensive income. Amounts that are reclassified from accumulated other comprehensive loss are recognized within interest expense on the consolidated statement of operations. | |||||||||||||||||||
The impact from interest rate swap contracts in cash flow hedging relationships for our consolidated entities was as follows: | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Unrealized loss recognized in other comprehensive income | $ | -1,456 | $ | -448 | |||||||||||||||
Loss reclassified from accumulated other comprehensive loss to interest expense | 585 | 625 | |||||||||||||||||
The above balances for our consolidated entities and our proportionate share of the impact from interest rate swap contracts in cash flow hedging relationships held by our equity method investees are included on our consolidated statement of comprehensive income net of tax. See Note 10 for the related tax effect on cash flow hedges that are recognized in other comprehensive income. |
ShareBased_Compensation_Plans
Share-Based Compensation Plans | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Share - Based Compensation Plans [Abstract] | ' | ||||||
Share-Based Compensation Plans | ' | ||||||
9. Share-Based Compensation Plans | |||||||
Our share-based compensation plans include both stock options and restricted awards. The following table summarizes our share-based compensation expense and related income tax benefit: | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Share-based compensation | $ | 4,617 | $ | 4,590 | |||
Related income tax benefit | 300 | 185 | |||||
As of March 31, 2014, we had total unrecognized compensation cost related to restricted share units, or RSUs, performance-based restricted share units, or performance RSUs, and stock options of $21,667, $14,612 and $1,977, respectively. Those amounts are expected to be recognized as expense over a weighted-average period of approximately two years. | |||||||
We estimate the fair value of RSU awards using the market price of our shares on the date of grant. We then recognize the fair value of each RSU award as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). | |||||||
Under our performance RSU awards, the number of restricted share units that ultimately vest depend on our share price performance against specified performance goals, which are defined in our performance RSU award agreements. We estimate the grant date fair value of each performance RSU award using a Monte Carlo valuation model. We then recognize the fair value of each performance RSU award as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). | |||||||
We did not grant any stock options during the three months ended March 31, 2014 or 2013. | |||||||
Our share-based compensation plan includes a “change in control” provision, which provides for cash redemption of equity awards issued thereunder in certain limited circumstances. In accordance with Securities and Exchange Commission Accounting Series Release No. 268, “Presentation in Financial Statements of Redeemable Preferred Stocks,” we present the redemption amount of these equity awards as temporary equity on the consolidated balance sheet as the equity award is amortized during the vesting period. The redemption amount represents the intrinsic value of the equity award on the grant date. In accordance with current accounting guidance regarding the classification and measurement of redeemable securities, we do not adjust the redemption amount each reporting period unless and until it becomes probable that the equity awards will become redeemable (upon a change in control event). Upon vesting of the equity awards, we reclassify the intrinsic value of the equity awards, as determined on the grant date, to permanent equity. | |||||||
Reconciliations of temporary equity for the three months ended March 31, 2014 and 2013 were as follows: | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Balance at beginning of year | $ | 15,664 | $ | 8,594 | |||
Compensation cost during the period for those equity awards with | |||||||
intrinsic value on the grant date | 3,833 | 3,392 | |||||
Intrinsic value of equity awards vested during the period for | |||||||
those equity awards with intrinsic value on the grant date | -8,865 | -3,794 | |||||
Balance at end of period | $ | 10,632 | $ | 8,192 | |||
Our articles of association provide for conditional capital for the issuance of shares under our share-based compensation plan and other convertible or exercisable securities we may issue in the future. Conditional capital decreases upon issuance of shares in connection with the exercise of outstanding stock options or vesting of restricted awards, with an offsetting increase to our issued and authorized share capital. As of March 31, 2014, our remaining available conditional capital was 57,775,870 shares. | |||||||
Accumulated_Other_Comprehenisi
Accumulated Other Comprehenisive Income | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Loss [Abstract] | ' | ||||||||||||
Accumulated other comprehensive loss | ' | ||||||||||||
10. Accumulated Other Comprehensive Loss | |||||||||||||
Below are the adjustments included in other comprehensive loss related to foreign currency translation, cash flow hedges and pension and other postretirement benefits and their related tax provision/(benefit) and balances attributable to noncontrolling interests and Foster Wheeler AG: | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Foreign currency translation | $ | -3,288 | $ | -14,413 | |||||||||
Tax impact | -7 | - | |||||||||||
Foreign currency translation, net of tax | -3,295 | -14,413 | |||||||||||
Less: Attributable to noncontrolling interests | -570 | -789 | |||||||||||
Attributable to Foster Wheeler AG | $ | -2,725 | $ | -13,624 | |||||||||
Cash flow hedges* | $ | -1,348 | $ | 317 | |||||||||
Tax impact | 473 | -80 | |||||||||||
Attributable to Foster Wheeler AG | $ | -875 | $ | 237 | |||||||||
Pension and other postretirement benefits | $ | -1,305 | $ | 3,414 | |||||||||
Tax impact | 156 | -355 | |||||||||||
Pension and other postretirement benefits, net of tax | -1,149 | 3,059 | |||||||||||
Less: Attributable to noncontrolling interests | 4 | 2 | |||||||||||
Attributable to Foster Wheeler AG | $ | -1,153 | $ | 3,057 | |||||||||
Other comprehensive loss attributable to Foster Wheeler AG | $ | -4,753 | $ | -10,330 | |||||||||
* Cash flow hedges include the impact of our proportionate share from unconsolidated affiliates accounted for under the equity method of accounting. | |||||||||||||
No tax is provided on foreign currency translation adjustments in comprehensive income to the extent the related earnings are indefinitely reinvested in each subsidiary's country of domicile. | |||||||||||||
Reclassifications from accumulated other comprehensive loss related to cash flow hedges included amounts related to our consolidated entities and our proportionate share of the impact from interest rate swap contracts in cash flow hedging relationships held by our equity method investees. Amounts that are reclassified from accumulated other comprehensive loss related to cash flow hedges from our consolidated entities are recognized within interest expense on the consolidated statement of operations, whereas amounts related to our equity method investees are recognized within equity earnings in other income, net on the consolidated statement of operations. Please refer to Note 8 for further information. | |||||||||||||
Reclassifications from accumulated other comprehensive loss related to pension and other postretirement benefits are included as a component of net periodic pension cost. Please refer to Note 6 for further information. | |||||||||||||
Below is a rollforward of accumulated other comprehensive loss adjusted for other comprehensive income/(loss) items attributable to Foster Wheeler AG (all amounts net of tax): | |||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
Accumulated Foreign Currency Translation | Cash Flow Hedges | Pension and Other Postretirement Benefits | Total Accumulated Other Comprehensive Loss | ||||||||||
Balance at December 31, 2012 | $ | -86,729 | $ | -12,412 | $ | -468,462 | $ | -567,603 | |||||
Other comprehensive (loss)/income | -13,624 | 237 | 3,057 | -10,330 | |||||||||
Balance at March 31, 2013 | $ | -100,353 | $ | -12,175 | $ | -465,405 | $ | -577,933 | |||||
Balance at December 31, 2013 | $ | -92,017 | $ | -8,845 | $ | -408,455 | $ | -509,317 | |||||
Other comprehensive loss | -2,725 | -875 | -1,153 | -4,753 | |||||||||
Balance at March 31, 2014 | $ | -94,742 | $ | -9,720 | $ | -409,608 | $ | -514,070 |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes [Abstract] | ' |
Income Taxes | ' |
11. Income Taxes | |
Although we are a Swiss corporation, our shares are listed on a U.S. exchange; therefore, we reconcile our effective tax rate to the U.S. federal statutory rate of 35% to facilitate meaningful comparison with peer companies in the U.S. capital markets. Our effective tax rate can fluctuate significantly from period to period and may differ considerably from the U.S. federal statutory rate as a result of (i) income taxed in various non-U.S. jurisdictions with rates different from the U.S. statutory rate, (ii) our inability to recognize a tax benefit for losses generated by certain unprofitable operations and (iii) the varying mix of income earned in the jurisdictions in which we operate. In addition, our deferred tax assets are reduced by a valuation allowance when, based upon available evidence, it is more likely than not that the tax benefit of loss carryforwards (or other deferred tax assets) will not be realized in the future. In periods when operating units subject to a valuation allowance generate pre-tax earnings, the corresponding reduction in the valuation allowance favorably impacts our effective tax rate. Conversely, in periods when operating units subject to a valuation allowance generate pre-tax losses, the corresponding increase in the valuation allowance has an unfavorable impact on our effective tax rate. | |
Effective Tax Rate for 2014 | |
Our effective tax rate for the first three months of 2014 was greater than the U.S. statutory rate of 35% primarily because of the disproportionately higher share of losses from jurisdictions where we are unable to recognize a tax benefit because of a valuation allowance. However, we expect the effective tax rate for the first quarter to be an exception and not indicative of the remaining quarters in 2014. | |
The increase in our effective tax rate for the first three months of 2014 was higher than the U.S. statutory rate of 35% primarily due to the net impact of the following: | |
During the first three months of 2014, income earned in non-U.S. jurisdictions contributed to an approximate 11-percentage point reduction in our effective tax rate, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items. We anticipate a similar impact on our 2014 full-year effective tax rate; and | |
During the first three months of 2014, we were unable to recognize a tax benefit for year-to-date losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which contributed to an approximate 16-percentage point increase in our effective tax rate. We do not anticipate this adjustment to be representative of the impact on our 2014 full-year effective tax rate. We expect the impact of losses subject to a valuation allowance to have a minimal impact on our 2014 full-year effective tax rate. | |
Effective Tax Rate for 2013 | |
Our effective tax rate for the first three months of 2013 was lower than the U.S. statutory rate of 35% due principally to the net impact of the following: | |
Income earned in non-U.S. jurisdictions which contributed to an approximate 17-percentage point reduction in our effective tax rate, primarily because of tax rates lower than the U.S. statutory rate, as well as additional impacts from equity income of joint ventures, tax incentives and credits, and other items; and | |
A valuation allowance increase because we were unable to recognize a tax benefit for year-to-date losses subject to a valuation allowance in certain jurisdictions (primarily in the U.S.), which contributed to an approximate six-percentage point increase in our effective tax rate. | |
We monitor the jurisdictions for which valuation allowances against deferred tax assets were established in previous years, and 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. | |
The majority of the U.S. federal tax benefits, against which valuation allowances have been established, do not expire until 2025 and beyond, based on current tax laws. | |
Our subsidiaries file income tax returns in many tax jurisdictions, including the U.S., 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 jurisdiction. Because of the number of jurisdictions in which we file tax returns, in any given year the statute of limitations in a number of jurisdictions may expire within 12 months 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 2009. | |
A number of tax years are under audit by the relevant tax authorities in various jurisdictions, including the U.S. and several states within the U.S. We anticipate that several of these audits may be concluded in the foreseeable future, including during the remainder of 2014. 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 magnitude of any such reduction 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 consolidated statement of operations. |
Business_Segments
Business Segments | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Business Segments [Abstract] | ' | |||||||||
Business Segments | ' | |||||||||
12. Business Segments | ||||||||||
We operate through two business segments, or groups: our Global E&C Group and our Global Power Group. | ||||||||||
Global E&C 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 export facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related infrastructure, including power generation facilities, distribution facilities, gasification facilities and processing facilities associated with the minerals and metals sector. Our Global E&C Group is also involved in the design of facilities in 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. Additionally, our Global E&C Group owns and operates electric power generating wind farms in Italy and also owns a noncontrolling interest in two electric power generation projects, one waste-to-energy project and one wind farm project, all of which are located in Italy, and a noncontrolling interest in a joint venture company that is fully licensed to engineer, procure and construct processing facilities in China. Our Global E&C Group generates revenues from design, engineering, procurement, construction and project management activities pursuant to contracts which generally span up to approximately four years in duration and from returns on its equity investments in various power production facilities. | ||||||||||
Global Power Group | ||||||||||
Our Global Power Group designs, manufactures and installs steam generating and auxiliary equipment for electric power generating stations, district heating and industrial facilities worldwide. Additionally, our Global Power Group holds a controlling interest and operates a combined-cycle gas turbine facility; owns a noncontrolling interest in a petcoke-fired circulating fluidized-bed facility for refinery steam and power generation; and operates a university cogeneration power facility for steam/electric generation. 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 broad range of steam generation and environmental technologies, offering independent power producers, utilities, municipalities and industrial clients high-value technology solutions for converting a wide range of fuels, such as coal, lignite, petroleum coke, oil, gas, solar, biomass, municipal solid waste and waste flue gases into steam, which can be used for power generation, district heating or industrial processes. | ||||||||||
Corporate and Finance Group | ||||||||||
In addition to our Global E&C Group and Global Power Group, which represent two of our operating segments for financial reporting purposes, we report the financial results associated with the management of entities which are not managed by one of our two business groups, which include corporate center expenses, our captive insurance operation and expenses related to certain legacy liabilities, such as asbestos, in the Corporate and Finance Group, which also represents an operating segment for financial reporting purposes and which we refer to as the C&F Group. | ||||||||||
Operating Revenues from Continuing Operations | ||||||||||
We conduct our business on a global basis. Operating revenues for our continuing operations by industry, business segment and geographic region, based upon where our projects are being executed, were as follows: | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Operating Revenues (Third-Party) by Industry: | ||||||||||
Power generation | $ | 182,855 | $ | 182,464 | ||||||
Oil refining | 203,034 | 323,738 | ||||||||
Pharmaceutical | 20,499 | 37,846 | ||||||||
Oil and gas | 103,774 | 85,258 | ||||||||
Chemical/petrochemical | 152,344 | 102,179 | ||||||||
Power plant design, operation and maintenance | 54,639 | 44,627 | ||||||||
Environmental | 1,670 | 1,224 | ||||||||
Other, net of eliminations | 14,884 | 12,808 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
Operating Revenues (Third-Party) by Business Segment: | ||||||||||
Global E&C Group | $ | 553,261 | $ | 587,974 | ||||||
Global Power Group | 180,438 | 202,170 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
Operating Revenues (Third-Party) by Geographic Region: | ||||||||||
Africa | $ | 13,169 | $ | 18,912 | ||||||
Asia Pacific | 221,827 | 193,013 | ||||||||
Europe | 144,446 | 188,189 | ||||||||
Middle East | 114,397 | 64,923 | ||||||||
North America | 185,960 | 241,594 | ||||||||
South America | 53,900 | 83,513 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
EBITDA | ||||||||||
EBITDA is the primary measure of operating performance used by our chief operating decision maker. We define EBITDA as net income attributable to Foster Wheeler AG before interest expense, income taxes and depreciation and amortization. | ||||||||||
A reconciliation of EBITDA to net income attributable to Foster Wheeler AG is shown below: | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
EBITDA: | ||||||||||
Global E&C Group | $ | 40,054 | $ | 35,188 | ||||||
Global Power Group | 28,726 | 24,687 | ||||||||
C&F Group * | -24,018 | -19,797 | ||||||||
Discontinued operations | - | 41 | ||||||||
Total EBITDA | 44,762 | 40,119 | ||||||||
Less: Discontinued operations | - | 41 | ||||||||
EBITDA from continuing operations | 44,762 | 40,078 | ||||||||
Add: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||||||||
Less: Interest expense | 3,662 | 2,672 | ||||||||
Less: Depreciation and amortization | 14,315 | 15,342 | ||||||||
Income from continuing operations before income taxes | 24,658 | 25,343 | ||||||||
Less: Provision for income taxes | 9,718 | 5,160 | ||||||||
Income from continuing operations | 14,940 | 20,183 | ||||||||
Loss from discontinued operations** | - | -3,878 | ||||||||
Net income | 14,940 | 16,305 | ||||||||
Less: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||||||||
Net income attributable to Foster Wheeler AG | $ | 17,067 | $ | 13,026 | ||||||
____________________ | ||||||||||
* Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest. | ||||||||||
** Loss from discontinued operations for the three months ended March 31, 2013 included an impairment charge of $3,919 recognized in connection with our | ||||||||||
Camden, New Jersey waste-to-energy facility. Please refer to Note 14 for further information. | ||||||||||
EBITDA in the above table includes the following: | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Net increase in contract profit from the regular | ||||||||||
revaluation of final estimated contract profit revisions:(1) | ||||||||||
Global E&C Group | $ | 3,300 | $ | 10,500 | ||||||
Global Power Group | 9,900 | 8,500 | ||||||||
Total | $ | 13,200 | $ | 19,000 | ||||||
Net asbestos-related provision in our C&F Group(2) | $ | 2,000 | $ | 2,000 | ||||||
Charges for severance-related postemployment benefits: | ||||||||||
Global E&C Group | $ | 900 | $ | 1,200 | ||||||
Global Power Group | 100 | 400 | ||||||||
C&F Group | - | 400 | ||||||||
Total | $ | 1,000 | $ | 2,000 | ||||||
______________ | ||||||||||
(1) Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 for further information regarding changes in our final estimated contract profit. | ||||||||||
(2) Please refer to Note 13 for further information regarding the revaluation of our asbestos liability and related asset. | ||||||||||
During 2013, we initiated restructuring actions relating to ongoing cost reduction efforts within our Global Power Group, including severance-related postemployment benefits and consolidation of manufacturing operations. We recorded net pre-tax restructuring costs totaling $19,100 for restructuring actions initiated in 2013. | ||||||||||
We are expecting to complete the severance-related postemployment benefits activities in 2014 and the majority of facility-related cost reduction actions in 2015. No specific plans for significant other actions have been finalized at this time. The following table summarizes the liability balances and utilization by cost type related to the 2013 restructuring actions: | ||||||||||
Net pre-tax restructuring costs | Severance | Facility exit, lease termination & other costs | Total | |||||||
Balance as of December 31, 2013 | $ | 11,400 | $ | 2,100 | $ | 13,500 | ||||
2014 charge | - | - | - | |||||||
Utilization and foreign exchange | -1,827 | -47 | -1,874 | |||||||
Balance as of March 31, 2014 | $ | 9,573 | $ | 2,053 | $ | 11,626 | ||||
The accounting policies of our business segments are the same as those described in our summary of significant accounting policies as disclosed in our 2013 Form 10-K. 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. | ||||||||||
Loss from discontinued operations included the following: | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
EBITDA from discontinued operations | $ | - | $ | 41 | ||||||
Less: Interest expense | - | - | ||||||||
Less: Depreciation and amortization* | - | 3,919 | ||||||||
Loss from discontinued operations before income taxes* | - | -3,878 | ||||||||
Less: Provision for income taxes | - | - | ||||||||
Loss from discontinued operations* | $ | - | $ | -3,878 | ||||||
During 2013, we recorded an impairment charge of $3,919 in connection with our Camden, New Jersey waste-to-energy facility which was recorded as depreciation expense within income/(loss) from discontinued operations. Please refer to Note 14 for further information. |
Litigation_and_Uncertainties
Litigation and Uncertainties | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
Litigation and Uncertainties | ' | |||||
Litigation and Uncertainties | ' | |||||
13. 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 U.S. and the U.K. 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 our U.S. claim activity is as follows: | ||||||
Three Months Ended March 31, | ||||||
Number of Claims by period: | 2014 | 2013 | ||||
Open claims at beginning of period | 125,240 | 125,310 | ||||
New claims | 990 | 1,210 | ||||
Claims resolved | -1,950 | -1,040 | ||||
Open claims at end of period | 124,280 | 125,480 | ||||
We had the following U.S. asbestos-related assets and liabilities recorded on our consolidated balance sheet as of the dates set forth below. Total U.S. asbestos-related liabilities are estimated through the first quarter of 2029. 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. | ||||||
U.S. Asbestos | 31-Mar-14 | 31-Dec-13 | ||||
Asbestos-related assets recorded within: | ||||||
Accounts and notes receivable-other | $ | 20,621 | $ | 20,256 | ||
Asbestos-related insurance recovery receivable | 90,831 | 91,225 | ||||
Total asbestos-related assets | $ | 111,452 | $ | 111,481 | ||
Asbestos-related liabilities recorded within: | ||||||
Accrued expenses | $ | 46,900 | $ | 52,600 | ||
Asbestos-related liability | 218,459 | 225,600 | ||||
Total asbestos-related liabilities | $ | 265,359 | $ | 278,200 | ||
Liability balance by claim category: | ||||||
Open claims | $ | 42,793 | $ | 46,800 | ||
Future unasserted claims | 222,566 | 231,400 | ||||
Total asbestos-related liabilities | $ | 265,359 | $ | 278,200 | ||
We have worked with Analysis, Research & Planning Corporation, or ARPC, nationally recognized consultants in the U.S. with respect to projecting asbestos liabilities, to estimate the amount of asbestos-related indemnity and defense costs at each year-end based on a forecast for the next 15 years. Each year we have recorded our estimated asbestos liability at a level consistent with ARPC's reasonable best estimate. Our estimated asbestos liability decreased during the first three months of 2014 as a result of indemnity and defense cost payments totaling approximately $14,800, partially offset by the impact of an increase in the liability related to our rolling 15-year asbestos-related liability estimate of approximately $2,000. The total asbestos-related liabilities are comprised of our estimates for our liability relating to open (outstanding) claims being valued and our liability for future unasserted claims through the first quarter of 2029. | ||||||
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 and non-malignancies, as well as other factors. 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 first quarter of 2029, 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 first quarter of 2029, 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 first quarter of 2029. | ||||||
Through March 31, 2014, total cumulative indemnity costs paid, prior to insurance recoveries, were approximately $835,900 and total cumulative defense costs paid were approximately $414,600, or approximately 33% of total defense and indemnity costs. The overall historic average combined indemnity and defense cost per resolved claim through March 31, 2014 has been approximately $3.3. The average cost per resolved claim is increasing and we believe it will continue to increase in the future. | ||||||
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. As our subsidiaries reach agreements with their insurers to settle their disputed asbestos-related insurance coverage, we increase our asbestos-related insurance asset and record settlement gains. | ||||||
Asbestos-related assets under executed settlement agreements with insurers due in the next 12 months are recorded within accounts and notes receivable-other and amounts due beyond 12 months are recorded within asbestos-related insurance recovery receivable. Asbestos-related insurance recovery receivable also includes our best estimate of actual and probable insurance recoveries relating to our liability for pending and estimated future asbestos claims through the first quarter of 2029. Our asbestos-related assets have not been discounted for the time value of money. | ||||||
Our insurance recoveries may be limited by future insolvencies among our insurers. We have not assumed recovery in the estimate of our asbestos-related insurance asset from any of our currently insolvent insurers. We have considered the financial viability and legal obligations of our subsidiaries' insurance carriers and believe that the insurers or their guarantors will continue to reimburse a significant portion of claims and defense costs relating to asbestos litigation. As of March 31, 2014 and December 31, 2013, we have not recorded an allowance for uncollectible balances against our asbestos-related insurance assets. We write off receivables from insurers that have become insolvent; there were no such write-offs during the three months ended March 31, 2014 or 2013. Insurers may become insolvent in the future and our insurers may fail to reimburse amounts owed to us on a timely basis. If we fail to realize the expected insurance recoveries, or experience delays in receiving material amounts from our insurers, our business, financial condition, results of operations and cash flows could be materially adversely affected. | ||||||
Our net asbestos-related provision during the three months ended March 31, 2014 and 2013 was approximately $2,000 in both periods and the provision in each period was the result of the accrual of our rolling 15-year asbestos liability estimate. | ||||||
The following table summarizes our approximate U.S. asbestos-related net cash impact for indemnity and defense cost payments and collection of insurance proceeds: | ||||||
Three Months Ended March 31, | ||||||
2014 | 2013 | |||||
Asbestos litigation, defense and case resolution payments | $ | 14,800 | $ | 14,600 | ||
Insurance proceeds | - | -8,900 | ||||
Net asbestos-related payments | $ | 14,800 | $ | 5,700 | ||
We expect to have net cash outflows of $32,100 during the full year 2014 as a result of asbestos liability indemnity and defense payments in excess of insurance proceeds. This estimate assumes no settlements with insurance companies and no 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, the asbestos-related insurance receivable recorded on our 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. | ||||||
Based on our December 31, 2013 liability estimate, an increase of 25% in the average per claim indemnity settlement amount would increase the liability by $40,300 and the impact on expense would be dependent upon available additional insurance recoveries. Assuming no change to the assumptions currently used to estimate our insurance asset, this increase would result in a charge on our consolidated statement of operations of approximately 85% 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 25%, the percentage of that increase that would be expected to be funded by additional insurance recoveries will decline. | ||||||
United Kingdom | ||||||
Some of our subsidiaries in the U.K. have also received claims alleging personal injury arising from exposure to asbestos. To date, 1,059 claims have been brought against our U.K. subsidiaries, of which 278 remained open as of March 31, 2014. None of the settled claims have resulted in material costs to us. | ||||||
The following table summarizes our asbestos-related liabilities and assets for our U.K. subsidiaries based on open (outstanding) claims and our estimate for future unasserted claims through the first quarter of 2029: | ||||||
U.K. Asbestos | 31-Mar-14 | 31-Dec-13 | ||||
Asbestos-related assets: | ||||||
Accounts and notes receivable-other | $ | 1,493 | $ | 1,483 | ||
Asbestos-related insurance recovery receivable | 27,880 | 29,264 | ||||
Total asbestos-related assets | $ | 29,373 | $ | 30,747 | ||
Asbestos-related liabilities: | ||||||
Accrued expenses | $ | 1,493 | $ | 1,483 | ||
Asbestos-related liability | 30,211 | 31,580 | ||||
Total asbestos-related liabilities | $ | 31,704 | $ | 33,063 | ||
Liability balance by claim category: | ||||||
Open claims | $ | 6,955 | $ | 8,487 | ||
Future unasserted claims | 24,749 | 24,576 | ||||
Total asbestos-related liabilities | $ | 31,704 | $ | 33,063 | ||
The liability estimates are based on a U.K. House of Lords judgment that pleural plaque claims do not amount to a compensable injury. If this ruling is reversed by legislation, the total asbestos liability recorded in the U.K. would increase to approximately $51,200, with a corresponding increase in the asbestos-related asset. | ||||||
Project Claims | ||||||
In addition to the specific matters described below, 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. | ||||||
Due to the inherent commercial, legal and technical uncertainties underlying the estimation of our project claims, 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. | ||||||
Power Plant Arbitration – United States | ||||||
In June 2011, a demand for arbitration was filed with the American Arbitration Association by our client's erection contractor against our client and us in connection with a power plant project in the U.S. At that time, no details of the erection contractor's claims were included with the demand. The arbitration panel was formed on September 26, 2012 and a detailed Statement of Claim from the erection contractor was delivered to the panel on October 24, 2012. According to the claim, the erection contractor is seeking unpaid contract amounts from our client and additional compensation from our client and us for alleged delays, disruptions, inefficiencies, and extra work in connection with the erection of the plant. We supplied the steam generation equipment for the project under contract with our client, the power plant owner. The turbine contractor, who supplied the turbine, electricity generator and other plant equipment under a separate contract with the power plant owner, has also been included as a party in the arbitration. The erection contractor is seeking approximately $240,000 in damages, exclusive of interest, from our client. Of this amount, the statement of claim asserts that approximately $150,000 is related to the steam generation equipment, and alleges failure on our part in connection with our performance under our steam generation equipment supply contract; those damages are claimed jointly against us and our client. The claims against us by the erection contractor allege negligence and, in its purported capacity as a third party beneficiary and assignee of our steam generation equipment supply contract, breach of contract. | ||||||
Responsive pleadings to the erection contractor's pleading were filed by the other parties, including us, on November 28, 2012. Our pleading denies the erection contractor's claims against us and asserts cross claims against our client seeking over $14,800 in damages related to delays, out of scope work, and improperly assessed delay liquidated damages. In its pleading, the turbine contractor asserts claims against our client for unpaid contract amounts and additional compensation for extra work and delays. In its capacity as a purported co-assignee of the steam generation equipment supply contract, the turbine contractor joins in the erection contractor's claims against us for delay-related damages and asserts cross claims against us seeking over $5,000 in non-delay related damages. In its pleading, our client asserts counter and cross claims for breach of contract and gross negligence against the erection contractor and the turbine contractor. Our client also asserts cross claims against us for any damages our client has incurred, and for indemnification of any damages our client may be required to pay to the erection and turbine contractors, arising out of alleged failures of performance on our part under our steam generation supply contract. We have denied our client's and the turbine contractor's cross claims against us. | ||||||
On August 30, 2013, our client filed a petition with the U.S. Bankruptcy Court for the District of Delaware seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The filing automatically stayed all proceedings against our client, including the four-party arbitration discussed above. Our client's filing included a motion seeking authorization for the use of cash collateral to fund its activities during the bankruptcy proceedings. In its motion, our client indicated its intent to draw on performance and retention letters of credit we previously issued in connection with the contract totaling approximately $59,000, contending that the funds were needed to fund operations during the bankruptcy and make repairs to the power plant. We opposed the motion on various grounds, including that any such draw would be unsupported and wrongful, and applied for an order temporarily restraining our client from drawing on the letters of credit, lifting the automatic stay of the arbitration proceeding and transferring the question of our client's right to draw on our letters of credit back to the arbitration for resolution in the context of the overall dispute. The bankruptcy court granted our application for temporary restraint and scheduled a further hearing on the issue, which on successive applications by our client was adjourned to November 21, 2013. | ||||||
On November 1, 2013, our client filed a motion seeking the bankruptcy court's approval of proposed debtor-in-possession financing. On November 13, 2013, our client filed its plan of reorganization. The confirmation hearing for the plan of reorganization is currently scheduled for May 21, 2014. On November 15, 2013, our client signed a stipulation to modify and lift the automatic stay of the arbitration proceedings by the bankruptcy filing to permit the arbitration to proceed as to all issues other than issues related to our letters of credit, which stipulation was approved by the bankruptcy court. The court-approved stipulation also provided for the withdrawal of our client's motion to draw on our letters of credit and a bar to re-filing such motion prior to March 1, 2014, absent exigent circumstances. Following the lifting of the bankruptcy stay, a scheduling conference was held by the arbitration panel in December 2013 and the panel extended the various procedural deadlines in the case. The final hearing is now set for the first and second quarters of 2015. | ||||||
The debtor-in-possession financing facility was approved by the court on November 21, 2013. The plan of reorganization contemplates, and any funding from the debtor-in-possession financing is conditioned upon, the achievement of various milestones by specified dates. One of the milestones is the reduction to zero by the bankruptcy court of the value of our mechanics lien and the mechanics liens of the turbine and erection contractors through a “claims estimation” proceeding. Our client moved to compel claims estimation on December 11, 2013. We and the turbine and erection contractors opposed the motion on various grounds. The motion was set to be heard on February 7, 2014 but adjourned at the request of our client to February 12, 2014. On February 10, 2014, we agreed to a partial settlement of the outstanding claims under our supply contract with our client. Under the agreement, we will perform certain new work on the steam generation equipment in exchange for (i) a release from our client of liability for alleged defects in the steam generation equipment, (ii) restriction of our client's right to draw on our letters of credit to disputes involving the new work, and (iii) a court-approved assignment of our client's right to seek indemnification for the cost of the new work from the erection and turbine contractors. Also, under the agreement we will release our client from liability for our $14,800 in project claims related to delays, out of scope work, and improperly assessed delay liquidated damages in exchange for a court-approved assignment of our client's right to seek indemnification for these claims from the turbine and erection contractors. The settlement agreement is subject to bankruptcy court approval, which approval was granted on March 7, 2014. The erection contractor has appealed the approval order, but has not applied to stay its enforcement during the pendency of the appeal. Accordingly, we are proceeding with the new work and intend to vigorously pursue in the arbitration our claims for the $14,800 in project claims and for the cost of the new work against the turbine and erection contractors. Our client's claims estimation motion, which was adjourned pending approval by the agreement of the bankruptcy court, has now been withdrawn as against us. | ||||||
Our letters of credit remain in place and we will vigorously oppose any attempt to draw down on them. | ||||||
We cannot predict the ultimate outcome of this matter at this time. | ||||||
Refinery and Petrochemicals Project Arbitration – India | ||||||
In November 2012, we commenced arbitration in India against our client seeking collection of unpaid receivables in excess of £52,000 (approximately $86,600 based on the exchange rate in effect as of March 31, 2014), arising from services performed on a reimbursable basis for our client in connection with our client's grass roots refinery and petrochemicals project in northeastern India. Our client rejected the claims and notified us of various potential counterclaims that it may be asserting in the arbitration, purportedly totaling in excess of £55,000 (approximately $91,600 based on the exchange rate in effect as of March 31, 2014). In June 2013, we submitted our detailed statement of claim, and in July 2013 our client submitted its detailed statement of defense and counterclaim. The amount of the counterclaim was increased to approximately £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) in damages, including among other claims a claim for lost profits due to delay in the execution of the project. The counterclaim concerns a number of alleged issues arising in connection with our execution of the engineering, procurement, and construction management scope of our contract, from the period from contract award until the subsequent transfer by our client of our remaining engineering, procurement and construction management scope to certain lump sum turnkey contractors hired directly by our client. Our client further contends that we are liable for delays to the project and has withheld payment on account of delay liquidated damages and, out of the total claim of £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) cited above, is seeking damages for lost profits in the amount of £555,000 (approximately $924,000 based on the exchange rate in effect as of March 31, 2014). We strongly dispute these contentions. Any liability for delay damages is capped under the contract at a specified percentage of our contract value, currently equivalent to approximately £11,500 (approximately $19,100 based on the exchange rate in effect as of March 31, 2014), an amount already retained by our client. The contract also excludes liability for consequential damages, including lost profits, and contains an overall cap on liability for claims in the aggregate of up to a specified percentage of our contract value, currently equivalent to approximately £28,800 (approximately $47,900 based on the exchange rate in effect as of March 31, 2014). The unpaid amount for which we are seeking reimbursement in the arbitration may increase should our client continue to withhold amounts from our invoices, as the project is still in execution. The arbitration panel has been formed. Our client moved to dismiss the arbitration as premature under the terms of the contract, and we opposed that motion. The motion has been denied by the panel. Also, pursuant to our request, the panel scheduled a hearing early in the first quarter of 2014 for our claims for unpaid receivables, along with our client's counterclaim for a deductive change order in the amount of approximately £21,600 (approximately $36,000 based on the exchange rate in effect as of March 31, 2014). An initial session of that hearing took place in January 2014 and a further session is scheduled for May 2014. The remaining claims and counterclaims, including our client's counterclaim for lost profits, are scheduled to be heard late in the fourth quarter of 2014. We cannot predict the ultimate outcome of this matter at this time. | ||||||
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 (including Mountain Top, which is described below). 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. | ||||||
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 wells 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 responding to the foregoing. 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 immediately provided the affected residences with bottled water, followed by water filters, and, pursuant to a settlement agreement with USEPA, it hooked them up to the public water system. Pursuant to an amendment of the settlement agreement, FWEC subsequently agreed with USEPA to arrange and pay for the hookup of several additional residences, even though TCE has not been detected in the wells at those residences. The hookups to the agreed upon residences have been completed, and USEPA has provided FWEC with a certificate that FWEC has completed its obligations related to the above-described settlement agreement (as amended). FWEC may be required to pay the agencies' costs in overseeing and responding to the situation. | ||||||
FWEC is also incurring further costs in connection with a Remedial Investigation / Feasibility Study (“RI/FS”) that in March 2009 it agreed to conduct. During the fourth quarter of 2012, FWEC received a USEPA demand under the foregoing agreement for payment of $1,040 of response costs USEPA claims it incurred from the commencement of the RI/FS in April 2009 through February 2012. FWEC questioned the amount of the invoice and based upon discussions with the USEPA, a revised invoice was received on June 17, 2013 for the reduced amount of $1,004. During the third quarter of 2013, FWEC received a USEPA invoice under the foregoing agreement for payment of $258 of response costs USEPA claims it incurred from March 2012 to February 2013. In April 2009, USEPA proposed for listing on the National Priorities List (“NPL”) an area consisting of FWEC's former manufacturing facility and the affected residences, but it also stated that the proposed listing may not be finalized if FWEC complies with its agreement to conduct the RI/FS. FWEC submitted comments opposing the proposed listing. | ||||||
FWEC has accrued its best estimate of the cost of all 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 or 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. | ||||||
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. | ||||||
Shareholder Class Action Lawsuits | ||||||
Four putative class action lawsuits have been filed on behalf of Foster Wheeler AG shareholders against Foster Wheeler AG, or the Company, and the Board of Directors of Foster Wheeler AG, or the Board, seeking to enjoin the proposed acquisition of the Company by AMEC from proceeding. The first of such lawsuits was filed on March 4, 2014. Two of the lawsuits are pending in Texas state court and the other two lawsuits are pending in the United States District Court for the District of New Jersey. AMEC is named as a co-defendant in the two Texas state court lawsuits. The complaints contain similar, standardized allegations. Plaintiffs allege that the directors breached fiduciary duties owed to plaintiff and the Company's other shareholders in pursuing the plan to sell the Company, and that the Company aided and abetted the defendant directors in committing such breach. In particular, plaintiffs allege that AMEC's per share exchange offer to acquire all of the Company's shares does not adequately compensate the Company's shareholders for their investment and significantly undervalues the Company's prospects as a standalone entity, that the consideration fails to take into account the value expected to be realized by AMEC as a result of the proposed acquisition, that the Board permitted Company management to lead the negotiations with AMEC when management was improperly incentivized to pursue the proposed acquisition, and that the Implementation Agreement improperly contains a number of deal protection devices designed to preclude any competing bids from emerging during the period following the announcement of the proposed acquisition in the Company's Form 8-K filing. Plaintiffs are in the process of serving summonses and complaints upon the Company and its Board. No class has been constituted yet. The Company believes that the allegations are without merit and intends to vigorously oppose the lawsuits on behalf of itself and on behalf of its Board. |
Discontinued_Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2014 | |
Discontinued Operations [Abstract] | ' |
Discontinued Operations | ' |
14. Discontinued Operations | |
During the first quarter of 2013, we recorded an impairment charge of $3,919 at our waste-to-energy facility in Camden, New Jersey within our Global Power Group business segment. This charge was in addition to an impairment charge of $11,455 recorded during the fourth quarter of 2012. The impairment charges in both periods included estimates related to the continued operation of the facility and potential sale of the facility. The charge in the first quarter of 2013 was the result of updating our estimate related to the potential sale of the facility and the impairment charge was recorded within income from discontinued operations on our consolidated statement of operations. After recording the impairment charge and after approval of the plan to sell the facility, discussed below, the carrying value of the facility's fixed assets approximated fair value less estimated costs to sell the facility. | |
On April 17, 2013, our Board of Directors approved a plan to sell our Camden facility and we completed the sale of the facility in August 2013. The presentation of the financial results and asset and liability balances of this business for the periods prior to the completion of the sale have been reclassified on our consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows under the respective captions related to discontinued operations, and these reclassifications have been made in the notes to our consolidated financial statements. Prior to the sale, the business had been classified on our consolidated balance sheet as of June 30, 2013 under the respective current and non-current captions of assets held for sale and liabilities held for sale as a result of our Board of Directors' approval of our plan to sell the facility, which met the accounting criteria as a business held for sale and the criteria for classification as a discontinued operation. We did not recognize depreciation on long-lived assets while held for sale. Our Camden facility was formerly included in our Global Power Group business segment. | |
We completed the sale of our Camden facility in August 2013. Based on the proceeds received and costs of disposal, we recognized a gain of $300 within income/(loss) from discontinued operations before income taxes on the consolidated statement of operations during the quarter and nine months ended September 30, 2013. | |
Operating revenues related to our discontinued operations, which were exclusively in the U.S., were $6,144 during the three months ended March 31, 2013. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policy) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | |||||||||||||||||
Basis of Presentation | ' | |||||||||||||||||
Basis of Presentation — The fiscal year of Foster Wheeler AG ends on December 31 of each calendar year. Foster Wheeler AG's fiscal quarters end on the last day of March, June and September. The fiscal years of our non-U.S. operations are the same as the parent's. The fiscal year of our U.S. operations is the 52- or 53-week annual accounting period ending on the last Friday in December. | ||||||||||||||||||
The accompanying 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 consolidated 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 year ended December 31, 2013 (“2013 Form 10-K”), filed with the Securities and Exchange Commission on February 27, 2014. The consolidated balance sheet as of December 31, 2013 was derived from the audited financial statements included in our 2013 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements. | ||||||||||||||||||
Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications also include the presentation of our former waste-to-energy business as a result of its classification as held-for-sale and, in turn, discontinued operations. Please refer to Note 14 for further information. | ||||||||||||||||||
The consolidated financial statements include the accounts of Foster Wheeler AG and all U.S. and non-U.S. subsidiaries, as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated. See “—Variable Interest Entities” below for further information related to the consolidation of variable interest entities. | ||||||||||||||||||
Use of Estimates | ' | |||||||||||||||||
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 in accounting for long-term contracts including estimates of total costs, progress toward completion and customer and vendor claims, employee benefit plan obligations and share-based compensation plans. In addition, we also use estimates when accounting for uncertain tax positions and deferred taxes, asbestos liabilities and expected recoveries and when assessing goodwill for impairment, among others. | ||||||||||||||||||
Revenue Recognition on Long-Term Contracts | ' | |||||||||||||||||
Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term contracts are recorded under the percentage-of-completion method. | ||||||||||||||||||
Progress towards completion on fixed-price contracts is measured based on physical completion of individual tasks for all contracts with a value of $5,000 or greater. For contracts with a value less than $5,000, progress toward completion is measured based on the ratio of costs incurred to total estimated contract costs (the cost-to-cost method). | ||||||||||||||||||
Progress towards completion on cost-reimbursable contracts is measured based on the ratio of quantities expended to total forecasted quantities, typically man-hours. Incentives are also recognized on a percentage-of-completion basis when the realization of an incentive is assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as both operating revenues and cost of operating revenues on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs. There is no contract profit impact of flow-through costs as they are included in both operating revenues and cost of operating revenues. | ||||||||||||||||||
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. A full provision for loss contracts is made at the time the loss becomes probable regardless of the stage of completion. | ||||||||||||||||||
At any time, we have numerous contracts in progress, all of which are at various stages of completion. Accounting for revenues and profits on long-term contracts requires estimates of total contract costs and estimates of progress toward completion to determine the extent of revenue and profit recognition. These estimates may be revised as additional information becomes available or as specific project circumstances change. We review all of our material contracts on a monthly basis and revise our estimates as appropriate for developments such as earning project incentive bonuses, incurring or expecting to incur 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 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. | ||||||||||||||||||
Changes in estimated final contract revenues and costs can either increase or decrease the final estimated contract profit. In the period in which a change in estimate is recognized, the cumulative impact of that change is recorded based on progress achieved through the period of change. The following table summarizes the number of separate projects that experienced final estimated contract profit revisions with an impact on contract profit in excess of $1,000 relating to the revaluation of work performed in prior periods: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Number of separate projects | 6 | 11 | ||||||||||||||||
Net increase in contract profit from the regular | ||||||||||||||||||
revaluation of final estimated contract profit revisions | $ | 13,200 | $ | 19,000 | ||||||||||||||
Please see Note 12 for further information related to changes in final estimated contract profit and the impact on business segment results. | ||||||||||||||||||
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 as additional contract revenue if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. These 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, which can include amounts from unapproved change orders when the two requirements described above are met. Unapproved change orders or similar items subject to uncertainty that do not meet the two requirements described above are expensed without the recognition of additional contract revenue. Costs attributable to claims are treated as costs of contract performance as incurred and are recorded in contracts in process. Our consolidated financial statements included commercial claims of $6,600 and $4,500 as of March 31, 2014 and December 31, 2013, respectively, of which substantially all costs had been incurred as of March 31, 2014 and December 31, 2013. | ||||||||||||||||||
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. In the event that we defer pre-contract costs and we are not successful in obtaining the contract, we write off the deferred costs through our consolidated statement of operations in the period when we no longer assess recoverability of such costs as probable. Deferred pre-contract costs were inconsequential as of March 31, 2014 and December 31, 2013. | ||||||||||||||||||
Certain special-purpose subsidiaries in our Global Power Group business segment are reimbursed by customers for their costs of building and operating certain facilities over the lives of the corresponding service contracts. Depending on the specific legal rights and obligations under these arrangements, in some cases those reimbursements are treated as operating revenues at gross value and other cases as a reduction of cost. | ||||||||||||||||||
Trade Accounts Receivable | ' | |||||||||||||||||
Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. We assess the need for an allowance for doubtful accounts on a project-by-project basis, which includes the consideration of security instruments that provide us protection in the event of non-payment. When there is a risk of non-payment related to customer credit risk, we record an allowance for doubtful accounts. Because of the nature of our customer base and our rigorous customer credit risk assessment process prior to entering into contracts, the level of our allowance for doubtful accounts is typically a very small percentage of our gross accounts receivable balance. To the extent that there is a risk of non-payment related to commercial or performance issues, we record an allowance against the valuation of contract work in progress within the contract. | ||||||||||||||||||
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, which we refer to as retention receivables. Final payment of retention receivables 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 consolidated balance sheet. We have not recorded a provision for the outstanding retention receivable balances as of March 31, 2014 or December 31, 2013. | ||||||||||||||||||
Trade accounts receivable are continually evaluated for collectability. 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. | ||||||||||||||||||
Variable Interest Entities | ' | |||||||||||||||||
Variable Interest Entities — We sometimes form separate legal entities such as corporations, partnerships and limited liability companies in connection with the execution of a single contract or project. Upon formation of each separate legal entity, we perform an evaluation to determine whether the new entity is a variable interest entity, or VIE, and whether we are the primary beneficiary of the new entity, which would require us to consolidate the new entity in our financial results. We reassess our initial determination on whether the entity is a VIE upon the occurrence of certain events and whether we are the primary beneficiary as outlined in current accounting guidelines. If the entity is not a VIE, we determine the accounting for the entity under the voting interest accounting guidelines. | ||||||||||||||||||
An entity is determined to be a VIE if either (a) the total equity investment is not sufficient for the entity to finance its own activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (such as the ability to make decisions through voting or other rights or the obligation to absorb losses or the right to receive benefits), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb losses of the entity and/or their rights to receive benefits of the entity, and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. | ||||||||||||||||||
As of March 31, 2014 and December 31, 2013, we participated in certain entities determined to be VIEs, including a gas-fired cogeneration facility in Martinez, California and a refinery/electric power generation project in Chile. We consolidate the operations of the Martinez project while we record our participation in the project in Chile on the equity method of accounting. | ||||||||||||||||||
Please see Note 3 for further information regarding our participation in these projects. | ||||||||||||||||||
Fair Value Measurements | ' | |||||||||||||||||
Fair Value Measurements — Fair value is defined 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. Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, 820-10 defines fair value, establishes a three level fair value hierarchy that prioritizes the inputs used to measure fair value and provides guidance on required disclosures about fair value measurements. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. | ||||||||||||||||||
Our financial assets and liabilities that are recorded at fair value on a recurring basis consist primarily of the assets or liabilities arising from derivative financial instruments and defined benefit pension plan assets. See Note 8 for further information regarding our derivative financial instruments. | ||||||||||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value: | ||||||||||||||||||
Financial instruments valued independent of the fair value hierarchy: | ||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash — The carrying value of our cash, cash equivalents and restricted cash approximates fair value because of the demand nature of many of our deposits or short-term maturity of these instruments. | ||||||||||||||||||
Financial instruments valued within the fair value hierarchy: | ||||||||||||||||||
Long-term Debt — We estimate the fair value of our long-term debt (including current installments) based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities using level 2 inputs. | ||||||||||||||||||
Foreign Currency Forward Contracts — We estimate the fair value of foreign currency forward contracts by obtaining quotes from financial institutions or market transactions in either the listed or over-the-counter markets. Our estimate of the fair value of foreign currency forward contracts also includes an assessment of non-performance by our counterparties. We further corroborate the valuations with observable market data using level 2 inputs. | ||||||||||||||||||
Interest Rate Swaps — We estimate the fair value of our interest rate swaps based on quotes obtained from financial institutions, which we further corroborate with observable market data using level 2 inputs. | ||||||||||||||||||
Defined Benefit Pension Plan Assets — We estimate the fair value of investments in equity securities at each year-end based on quotes obtained from financial institutions. The fair value of investments in commingled funds, invested primarily in debt and equity securities, is based on the net asset values communicated by the respective asset manager. We further corroborate the above valuations with observable market data using level 1 and 2 inputs. Additionally, we hold investments in private investment funds that are valued at net asset value as communicated by the asset manager using level 2 or 3 unobservable market data inputs. | ||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||
Fair value measurements: | ||||||||||||||||||
Assets: | ||||||||||||||||||
Assets measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,330 | $ | - | $ | - | $ | 7,361 | $ | - | ||||||
Assets measured at fair value on a non-recurring basis: | ||||||||||||||||||
Investment in an unconsolidated affiliate | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 35,096 | ||||||
Liabilities: | ||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,512 | $ | - | $ | - | $ | 2,405 | $ | - | ||||||
Interest rate swap contracts | - | 8,757 | - | - | 7,866 | - | ||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | - | $ | 10,269 | $ | - | $ | - | $ | 10,271 | $ | - | ||||||
Retirement of Shares under Share Repurchase Program | ' | |||||||||||||||||
Retirement of Shares under Share Repurchase Program — Under Swiss law, the cancellation of shares previously repurchased under our share repurchase program must be approved by our shareholders. Repurchased shares remain as treasury shares on our balance sheet until cancellation. | ||||||||||||||||||
Any repurchases will be made at our discretion 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 shares. The program has no expiration date and may be suspended or discontinued at any time. | ||||||||||||||||||
All treasury shares are carried at cost on the consolidated balance sheet until the cancellation of the shares has been approved by our shareholders and the cancellation is registered with the commercial register of the Canton of Zug in Switzerland. Upon the effectiveness of the cancellation of the shares, the cost of the shares cancelled will be removed from treasury shares on the consolidated balance sheet, the par value of the cancelled shares will be removed from registered shares on the consolidated balance sheet, and the excess of the cost of the treasury shares above par value will be removed from paid-in capital on the consolidated balance sheet. | ||||||||||||||||||
Once repurchased, treasury shares are no longer considered outstanding, which results in a reduction to the weighted-average number of shares outstanding during the reporting period when calculating earnings per share, as described below. | ||||||||||||||||||
Earnings per Share | ' | |||||||||||||||||
Earnings per Share — Basic earnings per share amounts have been computed based on the weighted-average number of shares outstanding during the reporting period. | ||||||||||||||||||
Diluted earnings per share amounts have been based on the combination of the weighted-average number of shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options and the non-vested portion of restricted stock units and performance-based restricted stock units (collectively, “restricted awards”) to the extent such securities are dilutive. | ||||||||||||||||||
In profitable periods, outstanding stock options have a dilutive effect under the treasury stock method when the average share price for the period exceeds the assumed proceeds from the exercise of the option. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the consolidated statement of operations, and any tax benefits that would be recorded in paid-in capital when the option is exercised. Under the treasury stock method, the assumed proceeds are assumed to be used to repurchase 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 share from continuing operations were as follows: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income from continuing operations attributable to Foster Wheeler AG | $ | 17,067 | $ | 16,904 | ||||||||||||||
Basic weighted-average number of shares outstanding | 99,147,429 | 104,386,669 | ||||||||||||||||
Effect of dilutive securities | 1,263,233 | 253,330 | ||||||||||||||||
Diluted weighted-average number of shares outstanding | 100,410,662 | 104,639,999 | ||||||||||||||||
Income from continuing operations per share: | ||||||||||||||||||
Basic | $ | 0.17 | $ | 0.16 | ||||||||||||||
Diluted | $ | 0.17 | $ | 0.16 | ||||||||||||||
The following table summarizes share-based compensation awards not included in the calculation of diluted earnings per share as the assumed proceeds from those awards, on a per share basis, were greater than the average share price for the period, which would result in an antidilutive effect on diluted earnings per share: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Stock options | 527,547 | 1,574,710 | ||||||||||||||||
Performance-based restricted share units | 432,445 | 1,132,649 | ||||||||||||||||
Pending Exchange Offer And Our Acquisition By Amec Plc | ' | |||||||||||||||||
Pending Exchange Offer and Our Acquisition by AMEC plc – On February 13, 2014, we entered into an Implementation Agreement (the “Implementation Agreement”) with AMEC plc (“AMEC”) relating to the acquisition of all of the issued and to be issued registered shares, par value CHF 3.00 per share, of Foster Wheeler AG (the “FW shares”) by AMEC. On the terms and subject to the conditions of the Implementation Agreement, AMEC will commence an exchange offer (the “Offer”) to acquire all of the FW shares, pursuant to which each validly tendered FW share will be exchanged for a combination (subject to election by each Foster Wheeler shareholder as described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014) of (a) $16.00 in cash plus (b) 0.8998 ordinary shares, par value £0.50 per share, of AMEC ("AMEC shares") or, at the election of such holder, American Depositary Shares representing such number of AMEC shares. | ||||||||||||||||||
The closing of the Offer is subject to, among other things, approval by our shareholders of certain amendments to our articles of association to remove certain transfer restrictions and certain voting limitations with respect to the FW shares. | ||||||||||||||||||
For a full description of the Offer, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014. | ||||||||||||||||||
Proposed Dividend | ' | |||||||||||||||||
Proposed Dividend – On February 26, 2014, our Board of Directors approved a proposal to our shareholders for a one-time dividend of $0.40 per share. We intend to ask our shareholders to approve this dividend at our Annual General Meeting on May 7, 2014 and, subject to shareholder approval, this dividend will be paid shortly after our Annual General Meeting. This dividend is not linked to, and not conditional on, the closing of the Offer. The covenants of our senior unsecured credit agreement do not limit our ability to pay this proposed dividend and we expect that there will be no Swiss withholding taxes on the dividend. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | |||||||||||||||||
Projects With Final Estimated Contract Profit Revisions Whose Impact Exceeds $1 million - Table | ' | |||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Number of separate projects | 6 | 11 | ||||||||||||||||
Net increase in contract profit from the regular | ||||||||||||||||||
revaluation of final estimated contract profit revisions | $ | 13,200 | $ | 19,000 | ||||||||||||||
Fair Value Measurements- Table | ' | |||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||
Fair value measurements: | ||||||||||||||||||
Assets: | ||||||||||||||||||
Assets measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,330 | $ | - | $ | - | $ | 7,361 | $ | - | ||||||
Assets measured at fair value on a non-recurring basis: | ||||||||||||||||||
Investment in an unconsolidated affiliate | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 35,096 | ||||||
Liabilities: | ||||||||||||||||||
Liabilities measured at fair value on a recurring basis: | ||||||||||||||||||
Foreign currency forward contracts | $ | - | $ | 1,512 | $ | - | $ | - | $ | 2,405 | $ | - | ||||||
Interest rate swap contracts | - | 8,757 | - | - | 7,866 | - | ||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | - | $ | 10,269 | $ | - | $ | - | $ | 10,271 | $ | - | ||||||
Basic and Diluted EPS - Table | ' | |||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income from continuing operations attributable to Foster Wheeler AG | $ | 17,067 | $ | 16,904 | ||||||||||||||
Basic weighted-average number of shares outstanding | 99,147,429 | 104,386,669 | ||||||||||||||||
Effect of dilutive securities | 1,263,233 | 253,330 | ||||||||||||||||
Diluted weighted-average number of shares outstanding | 100,410,662 | 104,639,999 | ||||||||||||||||
Income from continuing operations per share: | ||||||||||||||||||
Basic | $ | 0.17 | $ | 0.16 | ||||||||||||||
Diluted | $ | 0.17 | $ | 0.16 | ||||||||||||||
Antidilutive Securities - Table | ' | |||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Stock options | 527,547 | 1,574,710 | ||||||||||||||||
Performance-based restricted share units | 432,445 | 1,132,649 |
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Investments | ' | |||||||||||
Equity Method Investments, Summarized Financial Data - Table | ' | |||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Italy | Chile | Italy | Chile | |||||||||
Balance Sheet Data: | ||||||||||||
Current assets | $ | 171,591 | $ | 74,166 | $ | 156,844 | $ | 66,867 | ||||
Other assets (primarily buildings and equipment) | 250,729 | 86,532 | 259,392 | 88,936 | ||||||||
Current liabilities | 112,781 | 26,086 | 108,769 | 25,643 | ||||||||
Other liabilities (primarily long-term debt) | 149,785 | 14,482 | 149,578 | 14,482 | ||||||||
Net assets | $ | 159,754 | $ | 120,130 | $ | 157,889 | $ | 115,678 | ||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Italy | Chile | Italy | Chile | |||||||||
Income Statement Data: | ||||||||||||
Total revenues | $ | 33,279 | $ | 20,105 | $ | 33,009 | $ | 17,593 | ||||
Gross profit | 15,450 | 8,718 | 196 | 9,215 | ||||||||
Income/(loss) before income taxes | 7,641 | 5,566 | -1,653 | 8,885 | ||||||||
Net earnings/(loss) | 2,365 | 4,452 | -1,271 | 6,868 | ||||||||
Equity in the Net Earnings of Unconsolidated Affiliates- Table | ' | |||||||||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Equity in the net earnings of unconsolidated affiliates | $ | 3,921 | $ | 4,104 | ||||||||
Distributions from equity affiliates | $ | - | $ | 1,943 | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Investments in unconsolidated affiliates | $ | 154,258 | $ | 150,558 | ||||||||
Refinery/Power Generation Project in Chile - Table | ' | |||||||||||
Three Months Ended March 31, | ||||||||||||
2014 | 2013 | |||||||||||
Fees for operations and maintenance services (included in operating revenues) | $ | 2,728 | $ | 2,804 | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||
Receivable from our unconsolidated affiliate in Chile (included in trade receivables) | $ | 13,904 | $ | 7,866 | ||||||||
Schedule of Variable Interests - Table | ' | |||||||||||
Balance Sheet Data (excluding intercompany balances): | 31-Mar-14 | 31-Dec-13 | ||||||||||
Current assets | $ | 5,395 | $ | 5,897 | ||||||||
Other assets (primarily buildings and equipment) | 35,084 | 36,118 | ||||||||||
Current liabilities | 2,637 | 3,024 | ||||||||||
Other liabilities | 4,657 | 4,819 | ||||||||||
Net assets | $ | 33,185 | $ | 34,172 |
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||
Net Carrying Amount of Goodwill by Geographic Region and Business Segment - Table | ' | ||||||||||||||||||
Global E&C Group | Global Power Group | ||||||||||||||||||
Geographic Regions: | 31-Mar-14 | 31-Dec-13 | 31-Mar-14 | 31-Dec-13 | |||||||||||||||
North America | $ | 83,845 | $ | 84,447 | $ | 4,266 | $ | 4,266 | |||||||||||
Asia | 786 | 761 | - | - | |||||||||||||||
Europe | 6,835 | 6,787 | 73,060 | 72,959 | |||||||||||||||
Middle East | 585 | 581 | - | - | |||||||||||||||
Total | $ | 92,051 | $ | 92,576 | $ | 77,326 | $ | 77,225 | |||||||||||
Finite-lived Intangible Assets - Table | ' | ||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||
Patents | $ | 41,539 | $ | -34,973 | $ | 6,566 | $ | 41,526 | $ | -34,477 | $ | 7,049 | |||||||
Trademarks | 66,322 | -34,682 | 31,640 | 66,320 | -34,113 | 32,207 | |||||||||||||
Customer relationships, | |||||||||||||||||||
pipeline and backlog | 93,824 | -28,475 | 65,349 | 95,199 | -25,911 | 69,288 | |||||||||||||
Technology | 6,897 | -2,217 | 4,680 | 6,887 | -1,968 | 4,919 | |||||||||||||
Total | $ | 208,582 | $ | -100,347 | $ | 108,235 | $ | 209,932 | $ | -96,469 | $ | 113,463 | |||||||
Intangible Assets Amortization Schedule - Table | ' | ||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Amortization expense | $ | 4,108 | $ | 4,054 | |||||||||||||||
Approximate full year amortization expense for years: | |||||||||||||||||||
2014 | $ | 16,300 | |||||||||||||||||
2015 | 11,900 | ||||||||||||||||||
2016 | 9,600 | ||||||||||||||||||
2017 | 9,200 | ||||||||||||||||||
2018 | 9,000 |
Borrowings_Tables
Borrowings (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Borrowings [Abstract] | ' | |||||||||||||||||||
Components of Long-Term Debt- Table | ' | |||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||||
Current | Long-term | Total | Current | Long-term | Total | |||||||||||||||
Capital Lease Obligations | $ | 3,212 | $ | 50,593 | $ | 53,805 | $ | 3,040 | $ | 51,359 | $ | 54,399 | ||||||||
Special-Purpose Limited Recourse Project Debt: | ||||||||||||||||||||
FW Power S.r.l. | 7,444 | 55,799 | 63,243 | 7,433 | 55,722 | 63,155 | ||||||||||||||
Energia Holdings, LLC at 11.443% interest, | ||||||||||||||||||||
due April 15, 2015 | 2,040 | 5,355 | 7,395 | 2,040 | 5,355 | 7,395 | ||||||||||||||
Subordinated Robbins Facility Exit Funding Obligations: | ||||||||||||||||||||
1999C Bonds at 7.25% interest, due October 15, 2024 | - | 1,283 | 1,283 | - | 1,283 | 1,283 | ||||||||||||||
Total | $ | 12,696 | $ | 113,030 | $ | 125,726 | $ | 12,513 | $ | 113,719 | $ | 126,232 | ||||||||
Estimated fair value | $ | 140,130 | $ | 139,912 |
Pensions_and_Other_Postretirem1
Pensions and Other Postretirement Benefits (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Pensions and Other Postretirement Benefits [Abstract] | ' | ||||||||||||
Pension Benefits Contributions - Table | ' | ||||||||||||
Contributions in the three months ended March 31, 2014 | $ | 5,400 | |||||||||||
Remaining contributions expected for the year 2014 | 17,900 | ||||||||||||
Contributions expected for the year 2014 | $ | 23,300 | |||||||||||
Defined Benefit Plan - Table | ' | ||||||||||||
Defined Benefit Pension Plans | OPEB Plans | ||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net periodic benefit (credit)/cost: | |||||||||||||
Service cost | $ | 298 | $ | 300 | $ | 12 | $ | 18 | |||||
Interest cost | 14,020 | 12,829 | 588 | 859 | |||||||||
Expected return on plan assets | -18,127 | -16,291 | - | - | |||||||||
Amortization of loss/(gain) | 4,144 | 4,474 | -29 | 190 | |||||||||
Amortization of prior service credit | -571 | -390 | -874 | -874 | |||||||||
Amortization of transition obligation | 5 | 14 | - | - | |||||||||
Net periodic benefit (credit)/cost | $ | -231 | $ | 936 | $ | -303 | $ | 193 |
Guarantees_and_Warranties_Tabl
Guarantees and Warranties (Tables) | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
Guarantees and Warranties [Abstract] | ' | |||||
Warranty Liability Rollforward-Table | ' | |||||
Three Months Ended March 31, | ||||||
Warranty Liability: | 2014 | 2013 | ||||
Balance at beginning of year | $ | 73,500 | $ | 90,100 | ||
Accruals | 5,500 | 6,100 | ||||
Settlements | -1,600 | -2,000 | ||||
Adjustments to provisions* | -5,500 | -3,700 | ||||
Foreign currency translation | 900 | -2,200 | ||||
Balance at end of period | $ | 72,800 | $ | 88,300 | ||
_________________ | ||||||
Adjustments to the provisions represent reversals of warranty provisions that are no longer required. | ||||||
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||
Fair Value of Derivative Financial Instruments - Table | ' | ||||||||||||||||||
Fair Values of Derivative Financial Instruments | |||||||||||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance Sheet | March 31, | December 31, | Balance Sheet | March 31, | December 31, | ||||||||||||||
Location | 2014 | 2013 | Location | 2014 | 2013 | ||||||||||||||
Derivatives designated as | |||||||||||||||||||
hedging instruments: | |||||||||||||||||||
Interest rate swap | |||||||||||||||||||
contracts | Other assets | $ | - | $ | - | Other long-term liabilities | $ | 8,757 | $ | 7,866 | |||||||||
Derivatives not designated | |||||||||||||||||||
as hedging instruments: | |||||||||||||||||||
Foreign currency | Contracts in process or | Contracts in process or | |||||||||||||||||
forward contracts | billings in excess of costs | billings in excess of costs | |||||||||||||||||
and estimated earnings on | and estimated earnings on | ||||||||||||||||||
uncompleted contracts | 1,266 | 7,157 | uncompleted contracts | 1,406 | 2,018 | ||||||||||||||
Foreign currency | |||||||||||||||||||
forward contracts | Other accounts receivable | 64 | 204 | Accounts payable | 106 | 387 | |||||||||||||
Total derivatives | $ | 1,330 | $ | 7,361 | $ | 10,269 | $ | 10,271 | |||||||||||
Amount of Gain/(Loss) Recognized In Income On Derivatives - Table | ' | ||||||||||||||||||
Amount of Gain/(Loss) | |||||||||||||||||||
Location of Gain/(Loss) | Recognized in Income on Derivatives | ||||||||||||||||||
Derivatives Not Designated as | Recognized | Three Months Ended March 31, | |||||||||||||||||
Hedging Instruments | in Income on Derivatives | 2014 | 2013 | ||||||||||||||||
Foreign currency forward contracts | Cost of operating revenues | $ | -828 | $ | -7,320 | ||||||||||||||
Foreign currency forward contracts | Other deductions, net | 116 | -1,276 | ||||||||||||||||
Total | $ | -712 | $ | -8,596 | |||||||||||||||
Cash Flow Hedge Gain/(Loss) Reclassified to Interest Expense, Net - Table | ' | ||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Unrealized loss recognized in other comprehensive income | $ | -1,456 | $ | -448 | |||||||||||||||
Loss reclassified from accumulated other comprehensive loss to interest expense | 585 | 625 |
ShareBased_Compensation_Plans_
Share-Based Compensation Plans (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Share - Based Compensation Plans [Abstract] | ' | ||||||
Share-Based Compensation Expense and Related Tax-Table | ' | ||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Share-based compensation | $ | 4,617 | $ | 4,590 | |||
Related income tax benefit | 300 | 185 | |||||
Reconciliation of Temporary Equity-Table | ' | ||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Balance at beginning of year | $ | 15,664 | $ | 8,594 | |||
Compensation cost during the period for those equity awards with | |||||||
intrinsic value on the grant date | 3,833 | 3,392 | |||||
Intrinsic value of equity awards vested during the period for | |||||||
those equity awards with intrinsic value on the grant date | -8,865 | -3,794 | |||||
Balance at end of period | $ | 10,632 | $ | 8,192 |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Loss [Abstract] | ' | ||||||||||||
Schedule Of Comprehensive Income Loss- Table | ' | ||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Foreign currency translation | $ | -3,288 | $ | -14,413 | |||||||||
Tax impact | -7 | - | |||||||||||
Foreign currency translation, net of tax | -3,295 | -14,413 | |||||||||||
Less: Attributable to noncontrolling interests | -570 | -789 | |||||||||||
Attributable to Foster Wheeler AG | $ | -2,725 | $ | -13,624 | |||||||||
Cash flow hedges* | $ | -1,348 | $ | 317 | |||||||||
Tax impact | 473 | -80 | |||||||||||
Attributable to Foster Wheeler AG | $ | -875 | $ | 237 | |||||||||
Pension and other postretirement benefits | $ | -1,305 | $ | 3,414 | |||||||||
Tax impact | 156 | -355 | |||||||||||
Pension and other postretirement benefits, net of tax | -1,149 | 3,059 | |||||||||||
Less: Attributable to noncontrolling interests | 4 | 2 | |||||||||||
Attributable to Foster Wheeler AG | $ | -1,153 | $ | 3,057 | |||||||||
Other comprehensive loss attributable to Foster Wheeler AG | $ | -4,753 | $ | -10,330 | |||||||||
* Cash flow hedges include the impact of our proportionate share from unconsolidated affiliates accounted for under the equity method of accounting. | |||||||||||||
Components of Accumulated Other Comprehensive Loss - Table | ' | ||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
Accumulated Foreign Currency Translation | Cash Flow Hedges | Pension and Other Postretirement Benefits | Total Accumulated Other Comprehensive Loss | ||||||||||
Balance at December 31, 2012 | $ | -86,729 | $ | -12,412 | $ | -468,462 | $ | -567,603 | |||||
Other comprehensive (loss)/income | -13,624 | 237 | 3,057 | -10,330 | |||||||||
Balance at March 31, 2013 | $ | -100,353 | $ | -12,175 | $ | -465,405 | $ | -577,933 | |||||
Balance at December 31, 2013 | $ | -92,017 | $ | -8,845 | $ | -408,455 | $ | -509,317 | |||||
Other comprehensive loss | -2,725 | -875 | -1,153 | -4,753 | |||||||||
Balance at March 31, 2014 | $ | -94,742 | $ | -9,720 | $ | -409,608 | $ | -514,070 |
Business_Segments_Tables
Business Segments (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Business Segments [Abstract] | ' | |||||||||
Operating Revenues by Industry, Operating Segment and Geographic Regions - Table | ' | |||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Operating Revenues (Third-Party) by Industry: | ||||||||||
Power generation | $ | 182,855 | $ | 182,464 | ||||||
Oil refining | 203,034 | 323,738 | ||||||||
Pharmaceutical | 20,499 | 37,846 | ||||||||
Oil and gas | 103,774 | 85,258 | ||||||||
Chemical/petrochemical | 152,344 | 102,179 | ||||||||
Power plant design, operation and maintenance | 54,639 | 44,627 | ||||||||
Environmental | 1,670 | 1,224 | ||||||||
Other, net of eliminations | 14,884 | 12,808 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
Operating Revenues (Third-Party) by Business Segment: | ||||||||||
Global E&C Group | $ | 553,261 | $ | 587,974 | ||||||
Global Power Group | 180,438 | 202,170 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
Operating Revenues (Third-Party) by Geographic Region: | ||||||||||
Africa | $ | 13,169 | $ | 18,912 | ||||||
Asia Pacific | 221,827 | 193,013 | ||||||||
Europe | 144,446 | 188,189 | ||||||||
Middle East | 114,397 | 64,923 | ||||||||
North America | 185,960 | 241,594 | ||||||||
South America | 53,900 | 83,513 | ||||||||
Total | $ | 733,699 | $ | 790,144 | ||||||
Segment Reporting Information - Table | ' | |||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
EBITDA: | ||||||||||
Global E&C Group | $ | 40,054 | $ | 35,188 | ||||||
Global Power Group | 28,726 | 24,687 | ||||||||
C&F Group * | -24,018 | -19,797 | ||||||||
Discontinued operations | - | 41 | ||||||||
Total EBITDA | 44,762 | 40,119 | ||||||||
Less: Discontinued operations | - | 41 | ||||||||
EBITDA from continuing operations | 44,762 | 40,078 | ||||||||
Add: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||||||||
Less: Interest expense | 3,662 | 2,672 | ||||||||
Less: Depreciation and amortization | 14,315 | 15,342 | ||||||||
Income from continuing operations before income taxes | 24,658 | 25,343 | ||||||||
Less: Provision for income taxes | 9,718 | 5,160 | ||||||||
Income from continuing operations | 14,940 | 20,183 | ||||||||
Loss from discontinued operations** | - | -3,878 | ||||||||
Net income | 14,940 | 16,305 | ||||||||
Less: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||||||||
Net income attributable to Foster Wheeler AG | $ | 17,067 | $ | 13,026 | ||||||
____________________ | ||||||||||
* Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest. | ||||||||||
** Loss from discontinued operations for the three months ended March 31, 2013 included an impairment charge of $3,919 recognized in connection with our | ||||||||||
Camden, New Jersey waste-to-energy facility. Please refer to Note 14 for further information. | ||||||||||
EBITDA in the above table includes the following: | ||||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Net increase in contract profit from the regular | ||||||||||
revaluation of final estimated contract profit revisions:(1) | ||||||||||
Global E&C Group | $ | 3,300 | $ | 10,500 | ||||||
Global Power Group | 9,900 | 8,500 | ||||||||
Total | $ | 13,200 | $ | 19,000 | ||||||
Net asbestos-related provision in our C&F Group(2) | $ | 2,000 | $ | 2,000 | ||||||
Charges for severance-related postemployment benefits: | ||||||||||
Global E&C Group | $ | 900 | $ | 1,200 | ||||||
Global Power Group | 100 | 400 | ||||||||
C&F Group | - | 400 | ||||||||
Total | $ | 1,000 | $ | 2,000 | ||||||
______________ | ||||||||||
(1) Please refer to “Revenue Recognition on Long-Term Contracts” in Note 1 for further information regarding changes in our final estimated contract profit. | ||||||||||
(2) Please refer to Note 13 for further information regarding the revaluation of our asbestos liability and related asset. | ||||||||||
Schedule Of Restructuring And Related Costs- Table | ' | |||||||||
Net pre-tax restructuring costs | Severance | Facility exit, lease termination & other costs | Total | |||||||
Balance as of December 31, 2013 | $ | 11,400 | $ | 2,100 | $ | 13,500 | ||||
2014 charge | - | - | - | |||||||
Utilization and foreign exchange | -1,827 | -47 | -1,874 | |||||||
Balance as of March 31, 2014 | $ | 9,573 | $ | 2,053 | $ | 11,626 | ||||
Schedule of Income/(Loss) Associated with our Discontinued Operations-Table | ' | |||||||||
Three Months Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
EBITDA from discontinued operations | $ | - | $ | 41 | ||||||
Less: Interest expense | - | - | ||||||||
Less: Depreciation and amortization* | - | 3,919 | ||||||||
Loss from discontinued operations before income taxes* | - | -3,878 | ||||||||
Less: Provision for income taxes | - | - | ||||||||
Loss from discontinued operations* | $ | - | $ | -3,878 | ||||||
During 2013, we recorded an impairment charge of $3,919 in connection with our Camden, New Jersey waste-to-energy facility which was recorded as depreciation expense within income/(loss) from discontinued operations. Please refer to Note 14 for further information. |
Litigation_and_Uncertainties_T
Litigation and Uncertainties (Tables) | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
United States [Member] | ' | |||||
Asbestos-Related Open Claims Rollforward- Table | ' | |||||
Three Months Ended March 31, | ||||||
Number of Claims by period: | 2014 | 2013 | ||||
Open claims at beginning of period | 125,240 | 125,310 | ||||
New claims | 990 | 1,210 | ||||
Claims resolved | -1,950 | -1,040 | ||||
Open claims at end of period | 124,280 | 125,480 | ||||
Asbestos-Related Assets and Liabilities - Table | ' | |||||
U.S. Asbestos | 31-Mar-14 | 31-Dec-13 | ||||
Asbestos-related assets recorded within: | ||||||
Accounts and notes receivable-other | $ | 20,621 | $ | 20,256 | ||
Asbestos-related insurance recovery receivable | 90,831 | 91,225 | ||||
Total asbestos-related assets | $ | 111,452 | $ | 111,481 | ||
Asbestos-related liabilities recorded within: | ||||||
Accrued expenses | $ | 46,900 | $ | 52,600 | ||
Asbestos-related liability | 218,459 | 225,600 | ||||
Total asbestos-related liabilities | $ | 265,359 | $ | 278,200 | ||
Liability balance by claim category: | ||||||
Open claims | $ | 42,793 | $ | 46,800 | ||
Future unasserted claims | 222,566 | 231,400 | ||||
Total asbestos-related liabilities | $ | 265,359 | $ | 278,200 | ||
U.S. Asbestos-Related Payments And Insurance Settlement Proceeds- Table | ' | |||||
Three Months Ended March 31, | ||||||
2014 | 2013 | |||||
Asbestos litigation, defense and case resolution payments | $ | 14,800 | $ | 14,600 | ||
Insurance proceeds | - | -8,900 | ||||
Net asbestos-related payments | $ | 14,800 | $ | 5,700 | ||
United Kingdom [Member] | ' | |||||
Asbestos-Related Assets and Liabilities - Table | ' | |||||
U.K. Asbestos | 31-Mar-14 | 31-Dec-13 | ||||
Asbestos-related assets: | ||||||
Accounts and notes receivable-other | $ | 1,493 | $ | 1,483 | ||
Asbestos-related insurance recovery receivable | 27,880 | 29,264 | ||||
Total asbestos-related assets | $ | 29,373 | $ | 30,747 | ||
Asbestos-related liabilities: | ||||||
Accrued expenses | $ | 1,493 | $ | 1,483 | ||
Asbestos-related liability | 30,211 | 31,580 | ||||
Total asbestos-related liabilities | $ | 31,704 | $ | 33,063 | ||
Liability balance by claim category: | ||||||
Open claims | $ | 6,955 | $ | 8,487 | ||
Future unasserted claims | 24,749 | 24,576 | ||||
Total asbestos-related liabilities | $ | 31,704 | $ | 33,063 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Projects with final estimated contract profit revisions whose impact exceeded $1 million) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Projects | Projects | |
Summary of Significant Accounting Policies [Abstract] | ' | ' |
Number of contracts that had final estimated contract profit revisions whose impact on contract profit exceeded $1 million | 6 | 11 |
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions | $13,200 | $19,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Fair value measurements- Table) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Inputs, Level 1 [Member] | ' | ' |
Fair Value Assets [Abstract] | ' | ' |
Foreign currency forward contracts-Assets | $0 | $0 |
Investment in an unconsolidated affiliate | 0 | 0 |
Fair Value Liabilities [Abstract] | ' | ' |
Foreign currency forward contracts- Liabilities | 0 | 0 |
Interest rate swap contracts | 0 | 0 |
Total liabilities measured at fair value on a recurring basis | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Fair Value Assets [Abstract] | ' | ' |
Foreign currency forward contracts-Assets | 1,330 | 7,361 |
Investment in an unconsolidated affiliate | 0 | 0 |
Fair Value Liabilities [Abstract] | ' | ' |
Foreign currency forward contracts- Liabilities | 1,512 | 2,405 |
Interest rate swap contracts | 8,757 | 7,866 |
Total liabilities measured at fair value on a recurring basis | 10,269 | 10,271 |
Fair Value, Inputs, Level 3 [Member] | ' | ' |
Fair Value Assets [Abstract] | ' | ' |
Foreign currency forward contracts-Assets | 0 | 0 |
Investment in an unconsolidated affiliate | 0 | 35,096 |
Fair Value Liabilities [Abstract] | ' | ' |
Foreign currency forward contracts- Liabilities | 0 | 0 |
Interest rate swap contracts | 0 | 0 |
Total liabilities measured at fair value on a recurring basis | $0 | $0 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Basic and diluted earnings per share - Table) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Income from continuing operations attributable to Foster Wheeler AG | $17,067 | $16,904 |
Basic weighted-average number of shares outstanding | 99,147,429 | 104,386,669 |
Effect of dilutive securities | 1,263,233 | 253,330 |
Diluted weighted-average number of shares outstanding | 100,410,662 | 104,639,999 |
Basic earnings per share | $0.17 | $0.16 |
Diluted earnings per share | $0.17 | $0.16 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Options not included in diluted earnings calculation) (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stock Options [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Options not included in the computation of diluted earnings per share | 527,547 | 1,574,710 |
Performance Based Restricted Stock Units [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Options not included in the computation of diluted earnings per share | 432,445 | 1,132,649 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Assumed recovery of commercial claims | $6,600 | $4,500 |
Proposed Dividend | $0.40 | ' |
Business_Combinations_Narrativ
Business Combinations (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2014 | |
MDM Engineering Group Limited [Member] | ' |
Date of acquisition | 31-Mar-14 |
Description of acquired entity | 'minerals process and project management company focused on the mining industry. The company provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. |
Description of purchase agreement | 'acquire all of the ordinary shares and options of MDM Engineering in a cash transaction valued at approximately $109,000 (the “MDM Transaction”). The MDM Transaction is subject to MDM Engineering shareholder approval and other closing conditions. |
Siemens Environmental Systems and Services [Member] | ' |
Date of acquisition | 30-Apr-14 |
Description of acquired entity | 'The SESS business supplies and services clean air technologies for use in power plants and industrial facilities with locations in Pittsburgh, Pennsylvania and Branchburg, New Jersey. |
Description of purchase agreement | 'a cash transaction for a nominal amount. |
Upstream consultancy business [Member] | ' |
Date of acquisition | 30-Jun-13 |
Description of acquired entity | 'upstream consultancy business located in the United Kingdom and additional related assets in the Middle East. This acquired business specializes in field development and project decision support, focused on the evaluation and implementation of oil and gas field developments covering greenfield and brownfield assets |
Description of purchase agreement | 'We paid cash consideration net of cash acquired of £6,000 (approximately $9,300 based on the exchange rates in effect on the payment dates). The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of £3,000 (approximately $5,000 based on the exchange rate in effect on March 31, 2014), depending on the acquired business’ performance, as defined in the sale and purchase agreement, over a period of approximately 3 and a half years subsequent to the acquisition date |
Goodwill and intangible assets, business acquisition | 'As a result of the purchase price allocation, we recognized goodwill of $4,465 and other intangible assets of $5,307 related to this acquisition. |
Engineering and project management business [Member] | ' |
Date of acquisition | 30-Jun-13 |
Description of acquired entity | 'engineering and project management business located in Mexico with experience in both offshore and onshore upstream oil and gas, downstream oil and gas and power projects. |
Description of purchase agreement | 'We paid cash consideration net of cash acquired of approximately $15,700. The purchase price allocation and pro forma impact assuming the acquisition had occurred as of the beginning of 2012 were not significant to our consolidated financial statements. |
Goodwill and intangible assets, business acquisition | 'As a result of the purchase price allocation, we recognized goodwill of $18,143 and other intangible assets of $7,100 related to this acquisition. |
U.S.- based firm that specializes in management of construction and commissioning of pharmaceutical and biotech facilities acquisition [Member] | ' |
Date of acquisition | 31-Mar-13 |
Description of purchase agreement | 'We paid cash consideration net of cash acquired of approximately $25,100, which includes a working capital adjustment paid subsequent to the three months ended March 31, 2013. The sale and purchase agreement also included an earnout provision for additional consideration with an estimated maximum of approximately $6,600, depending on the acquired business’ performance, as defined in the sale and purchase agreement, over a period of approximately 5 years subsequent to the acquisition date. |
Goodwill and intangible assets, business acquisition | 'As a result of the purchase price allocation, we recognized goodwill of $10,571 and other intangible assets of $13,980 related to this acquisition. |
Investments_Equity_Method_Inve
Investments (Equity Method Investments, Summarized Financial Data - Table) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Italy [Member] | ' | ' | ' |
Current assets | $171,591 | ' | $156,844 |
Other assets (primarily buildings and equipment) | 250,729 | ' | 259,392 |
Current liabilities | 112,781 | ' | 108,769 |
Other liabilities (primarily long-term debt) | 149,785 | ' | 149,578 |
Net assets | 159,754 | ' | 157,889 |
Total revenues | 33,279 | 33,009 | ' |
Gross profit | 15,450 | 196 | ' |
Income before income taxes | 7,641 | -1,653 | ' |
Net earnings/(loss) | 2,365 | -1,271 | ' |
Chile [Member] | ' | ' | ' |
Current assets | 74,166 | ' | 66,867 |
Other assets (primarily buildings and equipment) | 86,532 | ' | 88,936 |
Current liabilities | 26,086 | ' | 25,643 |
Other liabilities (primarily long-term debt) | 14,482 | ' | 14,482 |
Net assets | 120,130 | ' | 115,678 |
Total revenues | 20,105 | 17,593 | ' |
Gross profit | 8,718 | 9,215 | ' |
Income before income taxes | 5,566 | 8,885 | ' |
Net earnings/(loss) | $4,452 | $6,868 | ' |
Investments_Equity_in_the_Net_
Investments (Equity in the Net Earnings of Partially Owned Affiliates - Table) (Details) (Chile and Italy [Member], USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Chile and Italy [Member] | ' | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' |
Equity in the net earnings of unconsolidated affiliates | $3,921 | $4,104 | ' |
Distributions from equity affiliates | 0 | 1,943 | ' |
Investment in unconsolidated affiliates | $154,258 | ' | $150,558 |
Investments_Refinerypower_gene
Investments (Refinery/power generation project in Chile - Table) (Details) (Chile [Member], USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Chile [Member] | ' | ' | ' |
Fees for operations and maintenance services (included in operating revenues) | $2,728 | $2,804 | ' |
Receivable from our unconsolidated affiliate in Chile (included in trade receivables) | $13,904 | ' | $7,866 |
Investments_Schedule_of_Variab
Investments (Schedule of Variable Interest Entities - Table) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments | ' | ' |
Current assets | $5,395 | $5,897 |
Other assets (primarily buildings and equipment) | 35,084 | 36,118 |
Current liabilities | 2,637 | 3,024 |
Other liabilities | 4,657 | 4,819 |
Net assets | $33,185 | $34,172 |
Investments_Narrative_Details
Investments (Narrative) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Project Which Generates Earnings From Royalty Payments Linked to the Price of Natural Gas in Italy [Member] | ' | ' |
Investment in unconsolidated affiliates | 50.00% | ' |
Waste-to-Energy Project in Italy [Member] | ' | ' |
Investment in unconsolidated affiliates | 39.00% | ' |
Wind Farm Project in Italy [Member] | ' | ' |
Investment in unconsolidated affiliates | 50.00% | ' |
Refinery / Power Generation Project in Chile [Member] | ' | ' |
Investment in unconsolidated affiliates | 85.00% | ' |
Chile [Member] | ' | ' |
Equity in the net earnings/(loss) of unconsolidated affiliates | $2,760 | $4,227 |
Guarantee for obligation under Chile based project operation and maintenance agreement | 20,000 | ' |
Italy [Member] | ' | ' |
Equity in the net earnings/(loss) of unconsolidated affiliates | $1,161 | ' |
Two Electric Power Generation Projects in Italy [Member] | ' | ' |
Investment in unconsolidated affiliates | 41.65% | ' |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Net carrying amount of goodwill by geographic region) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill | $169,377 | $169,801 |
Global E and C Group [Member] | ' | ' |
Goodwill | 92,051 | 92,576 |
Global E and C Group [Member] | North America [Member] | ' | ' |
Goodwill | 83,845 | 84,447 |
Global E and C Group [Member] | Asia [Member] | ' | ' |
Goodwill | 786 | 761 |
Global E and C Group [Member] | Europe [Member] | ' | ' |
Goodwill | 6,835 | 6,787 |
Global E and C Group [Member] | Middle East [Member] | ' | ' |
Goodwill | 585 | 581 |
Global Power Group [Member] | ' | ' |
Goodwill | 77,326 | 77,225 |
Global Power Group [Member] | North America [Member] | ' | ' |
Goodwill | 4,266 | 4,266 |
Global Power Group [Member] | Asia [Member] | ' | ' |
Goodwill | 0 | 0 |
Global Power Group [Member] | Europe [Member] | ' | ' |
Goodwill | 73,060 | 72,959 |
Global Power Group [Member] | Middle East [Member] | ' | ' |
Goodwill | $0 | $0 |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets (Finite-lived intangible assets table) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total identifiable intangible assets - Gross Carrying Amount | $208,582 | $209,932 |
Total identifiable intangible assets - Accumulated Amortization | -100,347 | -96,469 |
Total identifiable intangible assets - net carrying amount | 108,235 | 113,463 |
Patents [Member] | ' | ' |
Total identifiable intangible assets - Gross Carrying Amount | 41,539 | 41,526 |
Total identifiable intangible assets - Accumulated Amortization | -34,973 | -34,477 |
Total identifiable intangible assets - net carrying amount | 6,566 | 7,049 |
Trademarks [Member] | ' | ' |
Total identifiable intangible assets - Gross Carrying Amount | 66,322 | 66,320 |
Total identifiable intangible assets - Accumulated Amortization | -34,682 | -34,113 |
Total identifiable intangible assets - net carrying amount | 31,640 | 32,207 |
Customer Relationships Pipeline And Backlog [Member] | ' | ' |
Total identifiable intangible assets - Gross Carrying Amount | 93,824 | 95,199 |
Total identifiable intangible assets - Accumulated Amortization | -28,475 | -25,911 |
Total identifiable intangible assets - net carrying amount | 65,349 | 69,288 |
Patented Technology [Member] | ' | ' |
Total identifiable intangible assets - Gross Carrying Amount | 6,897 | 6,887 |
Total identifiable intangible assets - Accumulated Amortization | -2,217 | -1,968 |
Total identifiable intangible assets - net carrying amount | $4,680 | $4,919 |
Goodwill_and_Other_Intangible_4
Goodwill and Other Intangible Assets (Intangible assets amortization schedule) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill and Other Intangible Assets | ' | ' |
Amortization expense | $4,108 | $4,054 |
Amortization expense - forecast for 2013 | 16,300 | ' |
Amortization expense - forecast for 2014 | 11,900 | ' |
Amortization expense - forecast for 2015 | 9,600 | ' |
Amortization expense - forecast for 2016 | 9,200 | ' |
Amortization expense - forecast for 2017 | $9,000 | ' |
Goodwill_and_Other_Intangible_5
Goodwill and Other Intangible Assets (Narrative) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total identifiable intangible assets - net carrying amount | $108,235 | $113,463 |
Global E and C Group [Member] | ' | ' |
Total identifiable intangible assets - net carrying amount | 64,132 | ' |
Global Power Group [Member] | ' | ' |
Total identifiable intangible assets - net carrying amount | $44,103 | ' |
Borrowings_Components_of_longt
Borrowings (Components of long-term debt) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current | $12,696 | $12,513 |
Long-term | 113,030 | 113,719 |
Total | 125,726 | 126,232 |
Estimated fair value of long-term debt | 140,130 | 139,912 |
Capital Lease Obligations [Member] | ' | ' |
Current | 3,212 | 3,040 |
Long-term | 50,593 | 51,359 |
Total | 53,805 | 54,399 |
Secured Debt-FW Power Srl [Member] | ' | ' |
Current | 7,444 | 7,433 |
Long-term | 55,799 | 55,722 |
Total | 63,243 | 63,155 |
Secured Debt - Energia Holdings [Member] | ' | ' |
Current | 2,040 | 2,040 |
Long-term | 5,355 | 5,355 |
Total | 7,395 | 7,395 |
1999C Bonds [Member] | ' | ' |
Current | 0 | 0 |
Long-term | 1,283 | 1,283 |
Total | $1,283 | $1,283 |
Borrowings_Components_of_longt1
Borrowings (Components of long-term debt) (Parenthetical) (Details) | Mar. 31, 2014 | Dec. 31, 2013 |
Secured Debt - Energia Holdings [Member] | ' | ' |
Interest rate on term loan | 11.44% | 11.44% |
1999C Bonds [Member] | ' | ' |
Interest rate on term loan | 7.25% | 7.25% |
Borrowings_Narrative_Details
Borrowings (Narrative) (Details) (US 2012 Senior Credit Agreement [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
US 2012 Senior Credit Agreement [Member] | ' | ' |
Line of Credit Facility, Description on U.S. Senior Credit Agreement | 'Senior Credit Agreement — On August 3, 2012, we entered into a new five-year senior unsecured credit agreement, which replaced our amended and restated senior unsecured credit agreement from July 2010. Our senior credit agreement provides for an unsecured revolving line of credit of $750,000 and contains an increase option permitting us, subject to certain requirements, to arrange with existing lenders and/or new lenders to provide up to an aggregate of $300,000 in additional commitments. During the term of this senior credit agreement, we may request, subject to certain requirements, up to two one-year extensions of the contractual termination date. We can issue up to $750,000 under the letter of credit portion of the facility. Letters of credit issued under our senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in our corporate credit ratings, as defined in the senior credit agreement. Based on our current credit ratings, letter of credit fees for performance and non-performance letters of credit issued under our senior credit agreement are 0.75% and 1.50% per annum of the outstanding amount, respectively, excluding a nominal fronting fee. We also have the option to use up to $250,000 of the $750,000 for revolving borrowings at a rate equal to adjusted LIBOR, as defined in the senior credit agreement, plus 1.50%, subject also to the performance pricing noted above. | ' |
Letters of credit capacity under the credit facility | $750,000 | ' |
Fees and expenses in conjunction with the execution of senior credit agreement | 4,000 | ' |
Letters of credit facility, amount outstanding | 304,500 | 253,900 |
Letter of credit fees under U.S. senior credit agreement, Minimum | 0.75% | 0.75% |
Letter of credit fees under U.S. senior credit agreement, Maximum | 1.50% | 1.50% |
Borrowing capacity under credit facility | 750,000 | ' |
Amount of option to use for revolving borrowings | 250,000 | ' |
Line of Credit Facility, Aggregate Additional Uncommited Capacity | $300,000 | ' |
Line of Credit Facility, Interest Rate Description | 'a rate equal to adjusted LIBOR, as defined in the senior credit agreement, plus 1.50% | ' |
Pensions_and_Other_Postretirem2
Pensions and Other Postretirement Benefits (Pension benefits contributions) (Details) (Non-U.S. Pension Plan [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Non-U.S. Pension Plan [Member] | ' |
Contributions made through period end | $5,400 |
Remaining contributions expected for fiscal year 2014 | 17,900 |
Contributions expected for fiscal year 2014 | $23,300 |
Pensions_and_Other_Postretirem3
Pensions and Other Postretirement Benefits (Components of net periodic benefit cost and changes recognized in other comprehensive income) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Pension Plans, Defined Benefit [Member] | ' | ' |
Defined Benefit Plan, Net Periodic Benefit Cost/(Credit): | ' | ' |
Service cost | $298 | $300 |
Interest cost | 14,020 | 12,829 |
Expected return on plan assets | -18,127 | -16,291 |
Amortization of net actuarial loss/(gain) | 4,144 | 4,474 |
Amortization of prior service credit | -571 | -390 |
Amortization of transition obligation | 5 | 14 |
Net periodic benefit (credit)/cost | -231 | 936 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ' | ' |
Defined Benefit Plan, Net Periodic Benefit Cost/(Credit): | ' | ' |
Service cost | 12 | 18 |
Interest cost | 588 | 859 |
Expected return on plan assets | 0 | 0 |
Amortization of net actuarial loss/(gain) | -29 | 190 |
Amortization of prior service credit | -874 | -874 |
Amortization of transition obligation | 0 | 0 |
Net periodic benefit (credit)/cost | ($303) | $193 |
Guarantees_and_Warranties_Deta
Guarantees and Warranties (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | ||
Warranty Liability | ' | ' | ' | ||
Balance at beginning of year | $73,500 | $90,100 | ' | ||
Accruals | 5,500 | 6,100 | ' | ||
Settlements | -1,600 | -2,000 | ' | ||
Adjustments to provisions | -5,500 | [1] | -3,700 | [1] | ' |
Foreign currency translation | 900 | -2,200 | ' | ||
Balance at end of period | 72,800 | 88,300 | ' | ||
Amount we are contingently liable for under standby letters of credit, bank guarantees and surety bonds | 1,036,500 | ' | 960,500 | ||
Environmental liabilities | $6,700 | ' | $6,800 | ||
[1] | B Adjustments to the provisions represent reversals of warranty provisions that are no longer required. |
Derivative_Financial_Instrumen2
Derivative Financial Instruments (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Asset Derivatives | $1,330 | $7,361 |
Liability Derivatives | 10,269 | 10,271 |
Designated as Hedging Instrument [Member] | Other Assets [Member] | Interest Rate Contract [Member] | ' | ' |
Asset Derivatives | 0 | 0 |
Designated as Hedging Instrument [Member] | Other Long-Term Liabilities [Member] | Interest Rate Contract [Member] | ' | ' |
Liability Derivatives | 8,757 | 7,866 |
Not Designated as Hedging Instrument [Member] | Contracts In Process Or Billings In Excess Of Costs And Estimated Earnings On Uncompleted Contracts [Member] | Foreign Exchange Contract [Member] | ' | ' |
Asset Derivatives | 1,266 | 7,157 |
Liability Derivatives | 1,406 | 2,018 |
Not Designated as Hedging Instrument [Member] | Other accounts receivable [Member] | Foreign Exchange Contract [Member] | ' | ' |
Asset Derivatives | 64 | 204 |
Not Designated as Hedging Instrument [Member] | Other accounts payable [Member] | Foreign Exchange Contract [Member] | ' | ' |
Liability Derivatives | $106 | $387 |
Derivative_Financial_Instrumen3
Derivative Financial Instruments (Income on Derivatives) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Amount of gain/(loss) recognized in income on derivatives | ($712) | ($8,596) |
Cost of Operating Revenues [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Amount of gain/(loss) recognized in income on derivatives | -828 | -7,320 |
Other deductions, net [Member] | Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Amount of gain/(loss) recognized in income on derivatives | $116 | ($1,276) |
Derivative_Financial_Intrument
Derivative Financial Intruments (Schedule of Interest Rate Derivatives) (Details) (Cash Flow Hedging [Member], Interest Rate Contract [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash Flow Hedging [Member] | Interest Rate Contract [Member] | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' |
Unrealized loss recognized in other comprehensive income | ($1,456) | ($448) |
Loss reclassified from accumulated other comprehensive loss to net income | $585 | $625 |
Derivative_Financial_Instrumen4
Derivative Financial Instruments (Narrative) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' |
Total gross notional amount related to foreign currency forward contracts | $277,200 | ' |
Net cash inflows on the settlement of derivatives | 3,711 | -889 |
Aggregate notional amount of the receive-variable/pay-fixed interest rate swaps at end of period | $56,900 | ' |
Derivative, Lower Remaining Maturity Range | '0 years 0 months 1 day | ' |
Derivative, Higher Remaining Maturity Range | '2 years 0 months 0 days | ' |
ShareBased_Compensation_Plans_1
Share-Based Compensation Plans (Summary of share-based compensation expense and related income tax benefit) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Share - Based Compensation Plans [Abstract] | ' | ' |
Share-based Compensation | $4,617 | $4,590 |
Related income tax benefit | $300 | $185 |
ShareBased_Compensation_Plans_2
Share-Based Compensation Plans (Reconciliation of temporary equity - Table) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Share - Based Compensation Plans [Abstract] | ' | ' |
Balance at beginning of year | $15,664 | $8,594 |
Compensation cost during the period for those equity awards with intrinsic value on the grant date | 3,833 | 3,392 |
Intrinsic value of equity awards vested during the period for those equity awards with intrinsic value on the grant date | -8,865 | -3,794 |
Balance at end of period | $10,632 | $8,192 |
ShareBased_Compensation_Plans_3
Share-Based Compensation Plans (Narrative) (Details) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 |
Number of years of weighted-average period expected to be recognized as expense | '2 years 0 months 0 days |
Remaining available conditional capital shares | 57,775,870 |
Stock Options [Member] | ' |
Unrecognized compensation cost | 1,977 |
Restricted Stock Units (RSUs) [Member] | ' |
Unrecognized compensation cost | 21,667 |
Performance Restricted Stock Units [Member] | ' |
Unrecognized compensation cost | 14,612 |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Schedule Of Comprehensive Income Loss- Table) (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Accumulated Other Comprehensive Loss [Abstract] | ' | ' | ||
Foreign currency translation, Gross | ($3,288) | ($14,413) | ||
Tax Impact | -7 | 0 | ||
Foreign currency translation | -3,295 | -14,413 | ||
Less: Attributable to noncontrolling interests | -570 | -789 | ||
Attributable to Foster Wheeler AG | -2,725 | -13,624 | ||
Net (loss)/gain on cash flow hedges | -1,348 | [1] | 317 | [1] |
Tax Impact | 473 | -80 | ||
Attributable to Foster Wheeler AG | -875 | 237 | ||
Pension and other postretirement benefits | -1,305 | 3,414 | ||
Tax Impact | 156 | -355 | ||
Total pension and other postretirement benefits adjustments, net of tax | -1,149 | 3,059 | ||
Pension and Postretirement Benefits, Net of Tax Less: Attributable to noncontrolling interests | 4 | 2 | ||
Pension and Postretirement Benefits, Net of Tax , Atrributable to Foster Wheeler AG | -1,153 | 3,057 | ||
Other comprehensive (loss)/ income attributable to Foster Wheeler AG | ($4,753) | ($10,330) | ||
[1] | * Cash flow hedges include the impact of our proportionate share from unconsolidated affiliates accounted for under the equity method of accounting. |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Components of Accumulated Other Comprehensive Loss-Table) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Accumulated other comprehensive loss, beginning balance | ($509,317) | ($567,603) |
Other comprehensive (loss)/ income attributable to Foster Wheeler AG | -4,753 | -10,330 |
Total accumulated other comprehensive loss, ending balance | -514,070 | -577,933 |
Accumulated Translation Adjustment [Member] | ' | ' |
Accumulated other comprehensive loss, beginning balance | -92,017 | -86,729 |
Other comprehensive (loss)/ income attributable to Foster Wheeler AG | -2,725 | -13,624 |
Total accumulated other comprehensive loss, ending balance | -94,742 | -100,353 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ' | ' |
Accumulated other comprehensive loss, beginning balance | -8,845 | -12,412 |
Other comprehensive (loss)/ income attributable to Foster Wheeler AG | -875 | 237 |
Total accumulated other comprehensive loss, ending balance | -9,720 | -12,175 |
Accumulated Defined Benefit Plans Adjustment [Member] | ' | ' |
Accumulated other comprehensive loss, beginning balance | -408,455 | -468,462 |
Other comprehensive (loss)/ income attributable to Foster Wheeler AG | -1,153 | 3,057 |
Total accumulated other comprehensive loss, ending balance | ($409,608) | ($465,405) |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Contingency [Line Items] | ' | ' |
U.S. federal statutory rate | 35.00% | 35.00% |
Impact on the effective tax rate for total changes in the valuation allowance | 16.00% | 6.00% |
Impact on the effective tax rate for income earned in the jurisdictions with tax rates lower than the U.S. statutory rate | -11.00% | -17.00% |
Business_Segments_Operating_Re
Business Segments (Operating Revenues By Industry and by Segment - Table) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Operating revenues | $733,699 | $790,144 |
Africa Project Location [Member] | ' | ' |
Operating revenues | 13,169 | 18,912 |
Asia Pacific Project Location [Member] | ' | ' |
Operating revenues | 221,827 | 193,013 |
Europe Project Location [Member] | ' | ' |
Operating revenues | 144,446 | 188,189 |
Middle East Project Location [Member] | ' | ' |
Operating revenues | 114,397 | 64,923 |
North America Project Location [Member] | ' | ' |
Operating revenues | 185,960 | 241,594 |
South America Project Location [Member] | ' | ' |
Operating revenues | 53,900 | 83,513 |
Global E and C Group [Member] | ' | ' |
Operating revenues | 553,261 | 587,974 |
Global Power Group [Member] | ' | ' |
Operating revenues | 180,438 | 202,170 |
Power Generation [Member] | ' | ' |
Operating revenues | 182,855 | 182,464 |
Oil Refining [Member] | ' | ' |
Operating revenues | 203,034 | 323,738 |
Pharmaceutical [Member] | ' | ' |
Operating revenues | 20,499 | 37,846 |
Oil and Gas [Member] | ' | ' |
Operating revenues | 103,774 | 85,258 |
Chemical / Petrochemical [Member] | ' | ' |
Operating revenues | 152,344 | 102,179 |
Power Plant Design, Operation and Maintenance [Member] | ' | ' |
Operating revenues | 54,639 | 44,627 |
Environmental [Member] | ' | ' |
Operating revenues | 1,670 | 1,224 |
Other, Net of Eliminations [Member] | ' | ' |
Operating revenues | $14,884 | $12,808 |
Business_Segments_Reconciliati
Business Segments (Reconciliation of EBITDA to Net Income Attributable to Foster Wheeler - Table) (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Total EBITDA | $44,762 | $40,078 | ||
EBITDA from discontinued operations | 0 | 41 | ||
Less: EBITDA from discontinued operations | 0 | 41 | ||
Add: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||
Less: Interest expense | 3,662 | 2,672 | ||
Less: Depreciation and amortization | 14,315 | 15,342 | ||
Income from continuing operations before income taxes | 24,658 | 25,343 | ||
Less: Provision for income taxes | 9,718 | 5,160 | ||
Income from continuing operations | 14,940 | 20,183 | ||
Loss from discontinued operations | 0 | -3,878 | ||
Net income | 14,940 | 16,305 | ||
Less: Net (loss)/income attributable to noncontrolling interests | -2,127 | 3,279 | ||
Net income attributable to Foster Wheeler AG | 17,067 | 13,026 | ||
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions | 13,200 | 19,000 | ||
Net asbestos-related provision/(gain) | 2,008 | 2,000 | ||
Charges for severance-related postemployment benefits | 1,000 | 2,000 | ||
Global E and C Group [Member] | ' | ' | ||
Total EBITDA | 40,054 | 35,188 | ||
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions | 3,300 | [1] | 10,500 | [1] |
Charges for severance-related postemployment benefits | 900 | 1,200 | ||
Global Power Group [Member] | ' | ' | ||
Total EBITDA | 28,726 | 24,687 | ||
Net increase in contract profit from the regular revaluation of final estimated contract profit revisions | 9,900 | [1] | 8,500 | [1] |
Charges for severance-related postemployment benefits | 100 | 400 | ||
C and F Group [Member] | ' | ' | ||
Total EBITDA | -24,018 | [2] | -19,797 | [2] |
Net asbestos-related provision/(gain) | 2,000 | [3] | 2,000 | [3] |
Charges for severance-related postemployment benefits | $0 | $400 | ||
[1] | Please refer to bRevenue Recognition on Long-Term Contractsb in Note 1 for further information regarding changes in our final estimated contract profit. | |||
[2] | * Includes general corporate income and expense, our captive insurance operation and the elimination of transactions and balances related to intercompany interest. | |||
[3] | Please refer to Note 13 for further information regarding the revaluation of our asbestos liability and related asset. |
Business_Segments_Restructurin
Business Segments (Restructuring Costs - Table) (Details) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Restructuring and Related Cost [Line Items] | ' | ' |
Restructuring Reserve, Beginning | $13,500 | ' |
Restructuring Charges | 0 | 19,100 |
Utilization and foreign exchange | -1,874 | ' |
Restructuring Reserve, Ending | 11,626 | 13,500 |
Employee Severance [Member] | ' | ' |
Restructuring and Related Cost [Line Items] | ' | ' |
Restructuring Reserve, Beginning | 11,400 | ' |
Restructuring Charges | 0 | ' |
Utilization and foreign exchange | -1,827 | ' |
Restructuring Reserve, Ending | 9,573 | ' |
Facility Closing [Member] | ' | ' |
Restructuring and Related Cost [Line Items] | ' | ' |
Restructuring Reserve, Beginning | 2,100 | ' |
Restructuring Charges | 0 | ' |
Utilization and foreign exchange | -47 | ' |
Restructuring Reserve, Ending | $2,053 | ' |
Business_Segments_IncomeLoss_f
Business Segments (Income/Loss from Discontinued Operations - Table) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | |
EBITDA from discontinued operations | $0 | $41 | |
Less: Interest expense | ' | 0 | |
Less: Depreciation and amortization | ' | 3,919 | [1] |
Loss from discontinued operations before income taxes | 0 | -3,878 | |
Less: Provision for income taxes | 0 | 0 | |
Loss from discontinued operations | $0 | ($3,878) | |
[1] | During 2013, we recorded an impairment charge of $3,919 in connection with our Camden, New Jersey waste-to-energy facility which was recorded as depreciation expense within income/(loss) from discontinued operations. Please refer to Note 14 for further information. |
Business_Segments_Narrative_De
Business Segments (Narrative) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Asset Impairment Charge | ' | $3,919 | ' | $11,455 |
Restructuring Charges | $0 | ' | $19,100 | ' |
Litigation_and_Uncertainties_A
Litigation and Uncertainties (Asbestos-Related Open Claims Rollforward - Table) (Details) (United States [Member]) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
claims | claims | |
United States [Member] | ' | ' |
Open claims at beginning of period | 125,240 | 125,310 |
New claims | 990 | 1,210 |
Claims resolved | -1,950 | -1,040 |
Open claims at end of period | 124,280 | 125,480 |
Litigation_and_Uncertainties_U
Litigation and Uncertainties (US Asbestos related assets and liabilities - Table) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Asbestos-related assets: | ' | ' |
Asbestos related insurance recovery receivable | $118,711 | $120,489 |
Asbestos-related liabilities: | ' | ' |
Asbestos-related liability | 248,670 | 257,180 |
United States [Member] | ' | ' |
Asbestos-related assets: | ' | ' |
Accounts and notes receivable-other | 20,621 | 20,256 |
Asbestos related insurance recovery receivable | 90,831 | 91,225 |
Total asbestos-related assets | 111,452 | 111,481 |
Asbestos-related liabilities: | ' | ' |
Accrued expenses | 46,900 | 52,600 |
Asbestos-related liability | 218,459 | 225,600 |
Total asbestos-related liabilities | 265,359 | 278,200 |
Liability balance by claim category: | ' | ' |
Open claims | 42,793 | 46,800 |
Future unasserted claims | 222,566 | 231,400 |
Total asbestos-related liabilities | $265,359 | $278,200 |
Litigation_and_Uncertainties_S
Litigation and Uncertainties (Summary of asbestos related payments and insurance settlement proceeds - Table) (Details) (United States [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
United States [Member] | ' | ' |
Asbestos litigation, defense and case resolution payments | $14,800 | $14,600 |
Insurance proceeds | 0 | -8,900 |
Net asbestos-related payments | $14,800 | $5,700 |
Litigation_and_Uncertainties_U1
Litigation and Uncertainties (UK Asbestos related assets and liabilities - Table) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Asbestos-related assets: | ' | ' |
Asbestos related insurance recovery receivable | $118,711 | $120,489 |
Asbestos-related liabilities: | ' | ' |
Asbestos-related liability | 248,670 | 257,180 |
United Kingdom [Member] | ' | ' |
Asbestos-related assets: | ' | ' |
Accounts and notes receivable-other | 1,493 | 1,483 |
Asbestos related insurance recovery receivable | 27,880 | 29,264 |
Total asbestos-related assets | 29,373 | 30,747 |
Asbestos-related liabilities: | ' | ' |
Accrued expenses | 1,493 | 1,483 |
Asbestos-related liability | 30,211 | 31,580 |
Total asbestos-related liabilities | 31,704 | 33,063 |
Liability balance by claim category: | ' | ' |
Open claims | 6,955 | 8,487 |
Future unasserted claims | 24,749 | 24,576 |
Total asbestos-related liabilities | $31,704 | $33,063 |
Litigation_and_Uncertainties_N
Litigation and Uncertainties (Narrative) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
claims | claims | claims | claims | |
Environmental Matters [Member] | ' | ' | ' | ' |
Aggregate potential liability, maximum | $500 | ' | ' | ' |
Mountain Top [Member] | ' | ' | ' | ' |
Project claims arbitration allegations | '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. | ' | ' | ' |
Project claims actions taken by parties | '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 wells 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 responding to the foregoing. 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 immediately provided the affected residences with bottled water, followed by water filters, and, pursuant to a settlement agreement with USEPA, it hooked them up to the public water system. Pursuant to an amendment of the settlement agreement, FWEC subsequently agreed with USEPA to arrange and pay for the hookup of several additional residences, even though TCE has not been detected in the wells at those residences. The hookups to the agreed upon residences have been completed, and USEPA has provided FWEC with a certificate that FWEC has completed its obligations related to the above-described settlement agreement (as amended). FWEC may be required to pay the agencies’ costs in overseeing and responding to the situation. FWEC is also incurring further costs in connection with a Remedial Investigation / Feasibility Study (“RI/FS”) that in March 2009 it agreed to conduct. During the fourth quarter of 2012, FWEC received a USEPA demand under the foregoing agreement for payment of $1,040 of response costs USEPA claims it incurred from the commencement of the RI/FS in April 2009 through February 2012. FWEC questioned the amount of the invoice and based upon discussions with the USEPA, a revised invoice was received on June 17, 2013 for the reduced amount of $1,004. During the third quarter of 2013, FWEC received a USEPA invoice under the foregoing agreement for payment of $258 of response costs USEPA claims it incurred from March 2012 to February 2013. In April 2009, USEPA proposed for listing on the National Priorities List (“NPL”) an area consisting of FWEC’s former manufacturing facility and the affected residences, but it also stated that the proposed listing may not be finalized if FWEC complies with its agreement to conduct the RI/FS. FWEC submitted comments opposing the proposed listing. FWEC has accrued its best estimate of the cost of all 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 or 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. | ' | ' | ' |
Refinery And Petrochemicals Project Arbitration India [Member] | ' | ' | ' | ' |
Project claims arbitration filing date | 'November 2012 | ' | ' | ' |
Project claims arbitration allegations | 'we commenced arbitration in India against our client seeking collection of unpaid receivables in excess of £52,000 (approximately $86,600 based on the exchange rate in effect as of March 31, 2014), arising from services performed on a reimbursable basis for our client in connection with our client’s grass roots refinery and petrochemicals project in northeastern India. Our client rejected the claims and notified us of various potential counterclaims that it may be asserting in the arbitration, purportedly totaling in excess of £55,000 (approximately $91,600 based on the exchange rate in effect as of March 31, 2014). | ' | ' | ' |
Project claims actions taken by parties | 'In June 2013, we submitted our detailed statement of claim, and in July 2013 our client submitted its detailed statement of defense and counterclaim. The amount of the counterclaim was increased to approximately £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) in damages, including among other claims a claim for lost profits due to delay in the execution of the project. The counterclaim concerns a number of alleged issues arising in connection with our execution of the engineering, procurement, and construction management scope of our contract, from the period from contract award until the subsequent transfer by our client of our remaining engineering, procurement and construction management scope to certain lump sum turnkey contractors hired directly by our client. Our client further contends that we are liable for delays to the project and has withheld payment on account of delay liquidated damages and, out of the total claim of £620,000 (approximately $1,032,200 based on the exchange rate in effect as of March 31, 2014) cited above, is seeking damages for lost profits in the amount of £555,000 (approximately $924,000 based on the exchange rate in effect as of March 31, 2014). We strongly dispute these contentions. Any liability for delay damages is capped under the contract at a specified percentage of our contract value, currently equivalent to approximately £11,500 (approximately $19,100 based on the exchange rate in effect as of March 31, 2014), an amount already retained by our client. The contract also excludes liability for consequential damages, including lost profits, and contains an overall cap on liability for claims in the aggregate of up to a specified percentage of our contract value, currently equivalent to approximately £28,800 (approximately $47,900 based on the exchange rate in effect as of March 31, 2014). The unpaid amount for which we are seeking reimbursement in the arbitration may increase should our client continue to withhold amounts from our invoices, as the project is still in execution. The arbitration panel has been formed. Our client moved to dismiss the arbitration as premature under the terms of the contract, and we opposed that motion. The motion has been denied by the panel. Also, pursuant to our request, the panel scheduled a hearing early in the first quarter of 2014 for our claims for unpaid receivables, along with our client’s counterclaim for a deductive change order in the amount of approximately £21,600 (approximately $36,000 based on the exchange rate in effect as of March 31, 2014). An initial session of that hearing took place in January 2014 and a further session is scheduled for May 2014. The remaining claims and counterclaims, including our client’s counterclaim for lost profits, are scheduled to be heard late in the fourth quarter of 2014. We cannot predict the ultimate outcome of this matter at this time. | ' | ' | ' |
Shareholder Class Action Lawsuits [Member] | ' | ' | ' | ' |
Project claims arbitration filing date | 'March 4, 2014 | ' | ' | ' |
Project claims arbitration allegations | 'Plaintiffs allege that the directors breached fiduciary duties owed to plaintiff and the Company’s other shareholders in pursuing the plan to sell the Company, and that the Company aided and abetted the defendant directors in committing such breach. In particular, plaintiffs allege that AMEC’s per share exchange offer to acquire all of the Company’s shares does not adequately compensate the Company’s shareholders for their investment and significantly undervalues the Company’s prospects as a standalone entity, that the consideration fails to take into account the value expected to be realized by AMEC as a result of the proposed acquisition, that the Board permitted Company management to lead the negotiations with AMEC when management was improperly incentivized to pursue the proposed acquisition, and that the Implementation Agreement improperly contains a number of deal protection devices designed to preclude any competing bids from emerging during the period following the announcement of the proposed acquisition in the Company’s Form 8-K filing. | ' | ' | ' |
Project claims actions taken by parties | 'Plaintiffs are in the process of serving summonses and complaints upon the Company and its Board. | ' | ' | ' |
United Kingdom [Member] | ' | ' | ' | ' |
Asbestos related open claims number | 278 | ' | ' | ' |
Number of asbestos claims brought against United Kingdom | 1,059 | ' | ' | ' |
Asbestos related liability upon pleural plaque ruling | 51,200 | ' | ' | ' |
United States [Member] | ' | ' | ' | ' |
Asbestos related open claims number | 124,280 | 125,480 | 125,240 | 125,310 |
Asbestos litigation, defense and case resolution payments | 14,800 | 14,600 | ' | ' |
Total cumulative indemnity costs paid through the balance sheet date | 835,900 | ' | ' | ' |
Total cumulative defense costs paid through the balance sheet date | 414,600 | ' | ' | ' |
Portion of total defense and indemnity costs that represent defense costs | 33.00% | ' | ' | ' |
Historic average combined indemnity and defense cost per resolved claim | 3,300 | ' | ' | ' |
Expected cash outflows as a result of insurance settlements proceeds in excess of indemnity and defense payments | -32,100 | ' | ' | ' |
Average per claim indemnity increase rate | ' | ' | 25.00% | ' |
Estimated impact on the asbestos related liability from an increase of 25% in the average per claim indemnity settlement amount | ' | ' | $40,300 | ' |
Percentage of the asbestos related liability reserve that would result in an additional expense to be recognized in the statement of operations for a 25% increase in the average asbestos-related claim indemnity settlement amount and assuming no change in the assumptions currently used to estimate the asbestos-related insurance asset | ' | ' | 85.00% | ' |
United States [Member] | Power Plant Arbitration United States [Member] | ' | ' | ' | ' |
Project claims arbitration filing date | 'In June 2011, a demand for arbitration was filed with the American Arbitration Association by our client’s erection contractor against our client and us in connection with a power plant project in the U.S. At that time, no details of the erection contractor’s claims were included with the demand. The arbitration panel was formed on September 26, 2012 and a detailed Statement of Claim from the erection contractor was delivered to the panel on October 24, 2012. | ' | ' | ' |
Project claims arbitration allegations | 'According to the claim, the erection contractor is seeking unpaid contract amounts from our client and additional compensation from our client and us for alleged delays, disruptions, inefficiencies, and extra work in connection with the erection of the plant. We supplied the steam generation equipment for the project under contract with our client, the power plant owner. The turbine contractor, who supplied the turbine, electricity generator and other plant equipment under a separate contract with the power plant owner, has also been included as a party in the arbitration. | ' | ' | ' |
Project claims actions taken by parties | 'Responsive pleadings to the erection contractor’s pleading were filed by the other parties, including us, on November 28, 2012. Our pleading denies the erection contractor’s claims against us and asserts cross claims against our client seeking over $14,800 in damages related to delays, out of scope work, and improperly assessed delay liquidated damages. In its pleading, the turbine contractor asserts claims against our client for unpaid contract amounts and additional compensation for extra work and delays. In its capacity as a purported co-assignee of the steam generation equipment supply contract, the turbine contractor joins in the erection contractor’s claims against us for delay-related damages and asserts cross claims against us seeking over $5,000 in non-delay related damages. In its pleading, our client asserts counter and cross claims for breach of contract and gross negligence against the erection contractor and the turbine contractor. Our client also asserts cross claims against us for any damages our client has incurred, and for indemnification of any damages our client may be required to pay to the erection and turbine contractors, arising out of alleged failures of performance on our part under our steam generation supply contract. We have denied our client’s and the turbine contractor’s cross claims against us. | ' | ' | ' |
Project claims damages sought | 'The erection contractor is seeking approximately $240,000 in damages, exclusive of interest, from our client. Of this amount, the statement of claim asserts that approximately $150,000 is related to the steam generation equipment, and alleges failure on our part in connection with our performance under our steam generation equipment supply contract; those damages are claimed jointly against us and our client. The claims against us by the erection contractor allege negligence and, in its purported capacity as a third party beneficiary and assignee of our steam generation equipment supply contract, breach of contract. | ' | ' | ' |
Discontinued_Operations_Narrat
Discontinued Operations (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
Asset Impairment Charge | $3,919 | ' | $11,455 |
Operating revenues related to discontinued operations | 6,144 | ' | ' |
Gain/loss on sale of business | ' | $300 | ' |