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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    August 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 1-12227
  THE SHAW GROUP INC.
 (Exact name of registrant as
    specified in its charter)
  LOUISIANA

72-1106167(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   4171 Essen Lane
 Baton Rouge, Louisiana 70809
 (Address of principal executive
    offices) (Zip Code)
  (225) 932-2500
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock  no par value

New York Stock ExchangePreferred Stock Purchase Rights
    with respect to Common Stock  no par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None.
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K Form 10-K).




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##### 



TABLE OF
    CONTENTS
  
  PART ICautionary Statement Regarding Forward-Looking
    Statements


3Item 1.


Business


3Item 1A.


Risk Factors


17Item 1B.


Unresolved Staff Comments


33Item 2.


Properties


34Item 3.


Legal Proceedings


35Item 4.


Submission of Matters to a Vote of Security
    Holders


35PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


35Item 6.


Selected Financial Data


37Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


37Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


65Item 8.


Financial Statements and Supplementary Data


67Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


186Item 9A.


Controls and Procedures


187Item 9B.


Other Information


190PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


191Item 11.


Executive Compensation


195Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


195Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


195Item 14.


Principal Accounting Fees and Services


195PART IVItem 15.


Exhibits, Financial Statement Schedules


196Specimen Common Stock CertificateNon-Employee Director Compensation SummaryEmployment Agreement - Richard F. GillEmployee Indemnity AgreementEmployment Agreemeent - R. Monty GloverCode of Corporate ConductCode of EthicsInsider Trading PolicySubsidiariesConsent of KPMG LLPConsent of Ernst & Young LLPConsent of Ernst & Young LLPCertification Pursuant to Section 302Certification Pursuant to Section 302Certifcation Pursuant to Section 906Certificaiton Pursuant to Section 906    EXPLANATORY
    NOTE
  Form 10-K
  Form 8-K Form 10-K/A Form 10-Q/A Form 10-Q/A), Form 10-Q Form 10-Q/A 
 1




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
    Estimates of revenues and cost of revenues on contracts,
    including recognition of liquidated damages on a project, and
    allowances for uncollectible amounts resulting in changes to
    previously reported revenues and cost of revenues;
    Deferred costs deemed unrecoverable resulting in changes to
    previously reported cost of revenues;
    Compensation related matters, including vacation and benefit
    accruals, employment contracts, and stock-based compensation
    resulting in changes to costs of revenues, general and
    administrative expenses, other income and expense, and provision
    for income taxes; and
    Lease related items, including rent escalation provisions and
    amortization of leasehold improvements resulting in changes to
    costs of revenues and general and administrative expenses.
    Other errors resulting in other adjustments that are less
    significant and affect various other accounts.  Form 10-K.
  Form 10-K
  Form 10-K
 2




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PART I
  CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K;
  Form 10-K.
  Item 1.
    Business  General
         3




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Operating
    Segments
      Fossil &
    Nuclear Segment
    Nuclear.
 4




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Clean Coal-Fired Generation.
  Air Quality Control (AQC).
         5




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Gas-Fired Generation.
  Other Markets.
  Environmental &
    Infrastructure (E&I) Segment
    Federal Markets.
     6




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Commercial, State and Local Markets.
  Coastal and Natural Resource Restoration.
  Transportation Infrastructure.
  Ports and Marine Facilities.
  Other Markets. tm and/or
  Energy &
    Chemical (E&C) Segment
   7




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Chemicals.
  Refining.
    Ethylene. and/or
    Maintenance
    Segment
   8




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Nuclear Plant Maintenance and
    Modifications.
    Fossil Plant Maintenance and Modifications.
  Chemical Plant Maintenance and Capital Construction
    Services.
  Fabrication &
    Manufacturing (F&M) Segment
    Fabrication. man-hours
     9




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Manufacturing and Distribution.
  Investment
    in Westinghouse Segment
      Customers
    and Marketing
      Employees
   10




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Raw
    Materials and Suppliers
          Industry
    Certifications
         11




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Patents,
    Tradenames and Licenses and Other Intellectual
    Property
  tm tm
    ®
      Competition
         12




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Discontinued
    Operations
    Financial
    Information about Segments and Geographic Areas
      Backlog
    of Unfilled Orders
  project-by-project and/or
    Types of
    Contracts
  mark-up mark-up agreed-upon
      
    Cost-plus contract  A contract under which we are
    reimbursed for allowable or otherwise defined costs incurred
    plus a fee or
    mark-up. The
    contracts may also include incentives for various performance
    criteria, including quality, timeliness, ingenuity, safety and
    cost-effectiveness. In addition, our costs are generally subject
    to review by our customers and regulatory audit agencies, which
    could result in costs being disputed as non-reimbursable under
    the terms of the contract.
    Target-price contract  A contract under which we are
    reimbursed for costs plus a fee which may be at risk if the
    target price is exceeded. As a result, we are generally able to
    recover cost overruns on these contracts from actual damages for
    late delivery or the failure to meet certain performance
    criteria. Target-price contracts also generally provide for
    sharing of costs in excess of or savings for costs less than the
    target. In some contracts, we may agree to share cost overruns
    in excess of our fee, which could result in a loss on the
    project. 13




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
    Firm fixed-price contract  May include contracts in
    which the price is not subject to any cost or performance
    adjustments and contracts where certain risks are shared with
    clients such as labor costs, commodity pricing changes,
    and/or cost
    escalation. As a result, we may benefit or be penalized from
    costs variations from our original estimates. However, these
    contract prices may be adjusted for changes in scope of work,
    new or changing laws and regulations and other events negotiated.
    Maximum price contract  A contract that provides at
    the outset for an initial target cost, an initial target profit
    and a price ceiling. The price is subject to cost adjustments
    incurred, but the adjustments generally do not exceed the price
    ceiling established in the contract. In addition, these
    contracts usually include provisions whereby we share cost
    savings with our clients.
    Unit-price contract  A contract under which we are
    paid a specified amount for every unit of work performed. A
    unit-price contract is essentially a firm fixed-price contract
    with the only variable being the number of units of work
    performed. Variations in unit-price contracts include the same
    type of variations as firm fixed-price contracts. We are
    normally awarded these contracts on the basis of a total price
    that is the sum of the product of the specified units and the
    unit prices.         14




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Environmental
    Matters
  and/or
    clean-up
  Massachusetts, et al. v. EPA
  Available
    Information
  http://www.shawgrp.com, Form 10-K, Form 10-Q, Form 8-K
 15




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http://www.sec.gov. 1-800-SEC-0330.
  Certifications
  Form 10-K.
 16




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Item 1A.
    Risk
    Factors  The
    dollar amount of our backlog of unfilled orders, as stated at
    any given time, is not necessarily indicative of our future
    revenues or earnings.
          Our
    results of operations depend on new contract awards, and the
    selection process and timing for performing these contracts are
    subject to contingencies beyond our control.
    The
    nature of our contracts, particularly fixed-price contracts,
    could adversely affect us.
   17




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fixed-price. fixed-priced fixed-price
        Our
    projects may encounter difficulties that may result in
    additional costs to us, including but not limited to, reductions
    in revenues, claims, disputes and the payment of
    damages.
   18




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Our
    use of the percentage-of-completion accounting method could
    result in a reduction or elimination of previously reported
    profits.
    Our
    projects expose us to potential professional liability, product
    liability, warranty and other claims.
      Our
    failure to meet schedule or performance requirements of our
    contracts could adversely affect our
    profitability.
   19




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Our
    dependence on joint venture or consortium partners,
    subcontractors and equipment manufacturers could expose us to
    the risk of loss.
    If our
    partners fail to perform their contractual obligations on a
    project, we could be exposed to loss of reputation and
    additional financial performance obligations that could result
    in reduced profits or, in some cases, significant
    losses.
    Demand
    for our products and services is cyclical and vulnerable to
    downturns in the industries to which we market our products and
    services.
    The
    U.S. government can audit and disallow costs reimbursed under
    our government contracts and can terminate contracts without
    cause.
   20




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Each
    year some government contracts may be dependent on the
    legislative appropriations process. If legislative
    appropriations are not made in subsequent years of a
    multiple-year government contract, we may not realize all of our
    potential revenues and profits from that contract.
  year-by-year
  Actual
    results could differ from the estimates and assumptions that we
    use to prepare our financial statements.
    
    contract costs and profits and application of the
    percentage-of-completion method of accounting;
    revenues recognized, and reduction of costs recognized, as a
    result of contract claims;
    recoverability of inventory and application of lower of cost or
    market accounting;
    provisions for uncollectible receivables and customer claims and
    recoveries of costs from subcontractors, vendors and others;
    provisions for income taxes and related valuation allowances;
    recoverability of goodwill;
    recoverability of other intangibles and related estimated lives;
    valuation of assets acquired and liabilities assumed in
    connection with business combinations;
    valuation of defined benefit pension plans; and
    accruals for estimated liabilities, including litigation and
    insurance reserves.   21




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Risks
    related to our Investment in Westinghouse could have an adverse
    effect on us.
          Non-compliance
    with covenants in our Credit Facility, without waiver or
    amendment from the lenders, could adversely affect our ability
    to borrow under the Credit Facility.
       22




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Restrictive
    covenants in our Credit Facility may restrict our ability to
    pursue our business strategies.
    
    incur additional indebtedness or contingent obligations;
    issue preferred stock;
    pay dividends or make distributions to our shareholders;
    repurchase or redeem our capital stock or subordinated
    indebtedness;
    make investments;
    create liens;
    enter into sale/leaseback transactions;
    incur restrictions on the ability of our subsidiaries to pay
    dividends or to make other payments to us;
    make capital expenditures;
    enter into transactions with our shareholders and affiliates;
    sell and pledge assets; and
    acquire the assets of, or merge or consolidate with, other
    companies or transfer all or substantially all of our assets.      Because
    of the capital-intensive nature of our business, we are
    vulnerable to reductions in our liquidity.
      
    have less operating flexibility due to restrictions that could
    be imposed by our creditors, including restrictions on incurring
    additional debt, creating liens on our properties and paying
    dividends;
    have less success in obtaining new contracts if our sureties or
    our lenders limited our ability to provide new performance bonds
    or letters of credit for our projects;
    be required to dedicate a substantial portion of our cash flows
    from operations to the repayment of debt and the interest
    associated with that debt; 23




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
    incur increased lending fees, costs and interest rates; and
    experience difficulty in financing future acquisitions
    and/or
    continuing operations.    Our
    borrowing levels and debt service obligations could adversely
    affect our financial condition and impair our ability to fulfill
    our obligations under our Credit Facility.
    
    requiring us to dedicate a substantial portion of our cash flows
    from operations to payments on our indebtedness, which reduces
    the cash available for other business purposes;
    limiting our ability to obtain additional financing and creating
    additional liens on our assets;
    limiting our flexibility in planning for, and reacting to,
    changes in our business;
    placing us at a competitive disadvantage if we are more
    leveraged than our competitors;
    making us more vulnerable to adverse economic and industry
    conditions; and
    restricting us from making additional investments or
    acquisitions.    Our
    ability to obtain adequate bonding and, as a result, to bid on
    new work could have a material adverse effect on our future
    revenues and business prospects.
    Downgrades
    by rating agencies may require us to modify existing bonding
    facilities or obtain new bonding facilities.
   24




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We are
    currently the subject of an SEC informal inquiry that could
    adversely affect our business.
    Form 8-K
    Lawsuits
    and regulatory proceedings could adversely affect our
    business.
      Our
    environmental and infrastructure operations may subject us to
    potential contractual and operational costs and
    liabilities.
  and/or
 25




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We are
    exposed to certain risks associated with our integrated
    environmental solutions businesses.
  and/or and/or
    The
    limitation or the modification of the Price-Anderson Acts
    indemnification authority could adversely affect our
    business.
   26




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Environmental
    factors and changes in laws and regulations could increase our
    costs and liabilities and affect the demand for our
    services.
    
    emissions into the air;
    discharges into waterways;
    generation, storage, handling, treatment and disposal of waste
    materials and hazardous substances; and
    health and safety.         27




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Development
    and construction risks and other risks associated with our
    military family housing privatization contracts could impact our
    profitability and cause a loss of our investment.
    
    our ability to obtain necessary permitting, land-use, building,
    occupancy and other required governmental permits and
    authorizations on a timely basis, which could result in
    increased development costs;
    the incurrence of construction costs related to new construction
    or renovations that exceed original estimates due to increased
    materials, labor or other costs, which costs could contribute to
    a lower than expected return;
    our ability to complete construction of a property on schedule
    and meet financial goals for development; and
    the incurrence of higher construction costs or experience in
    project delays if we are not successful in forming strategic
    alliances with key material suppliers and vendors.    
    our ability to obtain the necessary levels of occupancy and
    rents, which could result in lower than expected returns and, in
    some cases, losses. Rents are determined by the
    U.S. Congress annually through appropriations for Basic
    Allowance for Housing (BAH) for all of the branches of the
    U.S. military. We cannot be assured that the appropriations
    each year will occur on a timely basis, or that the amount of
    BAH appropriations will be sufficient to keep up with
    escalations in the cost of living expenses. Congress may change
    the law and the DOD can revise its procedures at any time. We
    cannot be assured that such changes will not be made and, if
    changes are made, such changes may have a material adverse
    effect on the level of our income generated by our privatization
    projects, if rental income is not sufficient to cover project
    debt service requirements the joint venture may need to
    supplement income from fees or other sources; and
    our ability to guarantee that the military bases where we have
    military family housing projects will remain active or that
    their functions
    and/or
    staffing levels will not be materially reduced such that we will
    be unable to lease military family housing units to members of
    the U.S. military. The DOD has, from time to time, closed
    military bases and realigned
    and/or
    reduced the functions and staffing levels at certain bases under
    the Base Realignment and Closure (BRAC) initiative.    Our
    working capital requirements may increase as a result of our
    work associated with the military family housing privatization
    market.
    Our
    dependence on one or a few customers could adversely affect
    us.
   28




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If we
    experience delays and/or defaults in customer payments, we could
    be unable to recover all expenditures.
    We
    face substantial competition in each of our business
    segments.
        Political
    and economic conditions in foreign countries in which we operate
    could adversely affect us.
   29




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
    uncertain economic conditions in the foreign countries in which
    we make capital investments, operate and sell products and
    services;
    the lack of well-developed legal systems and less established or
    traditional business practices in some countries in which we
    operate and sell products and services, which could make it
    difficult for us to enforce our contractual rights;
    security and safety of employees and subcontractors;
    expropriation of property;
    restrictions on the right to convert or repatriate currency;
    political risks, including risks of loss due to civil strife,
    acts of war, guerrilla activities and insurrection;
    greater risk of uncollectible accounts and longer collection
    cycles;
    currency fluctuations;
    logistical and communications challenges;
    potential adverse changes in laws and regulatory practices,
    including embargoes, export license requirements, trade
    barriers, increased tariffs and taxes;
    changes in labor conditions;
    exposure to liability under the Foreign Corrupt Practices
    Act; and
    general economic and political conditions in foreign markets.  Work
    stoppages and other labor problems could adversely affect
    us.
    Foreign
    exchange risks may affect our ability to realize a profit from
    certain projects or to obtain projects.
     30




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Our
    earnings could be negatively impacted if we write off a
    significant amount of intangible assets or long-lived
    assets.
    We may
    incur unexpected liabilities associated with
    acquisitions.
        Difficulties
    integrating our acquisitions could adversely affect
    us.
    Our
    failure to attract and retain qualified personnel, including key
    officers, could have an adverse effect on us.
   31




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Changes
    in technology could adversely affect us, and our competitors may
    develop or otherwise acquire equivalent or superior
    technology.
        If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report our financial results or
    prevent fraud. As a result, investors could lose confidence in
    our financial reporting, which would harm our business and the
    trading price of our stock.
    We
    rely on our information systems in our operations. Failure to
    protect these systems against security breaches could adversely
    affect our business and results of operations. Additionally, if
    these systems fail or become unavailable for any significant
    period of time, our business could be harmed.
   32




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Terrorists
    actions have and could continue to negatively impact the global
    economy and the markets in which we operate.
    Item 1B.
    Unresolved
    Staff Comments   33




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Item 2.
    Properties    Owned /Location

Description

Segment Using Property

LeasedBaton Rouge, LA

Corporate Headquarters

Corporate

LeasedAddis, LA

Fabrication Facility

F&M

OwnedAskar, Bahrain

Office Building

F&M

LeasedBaton Rouge, LA

Office Building

E&I

LeasedCambridge, MA

Office Building

E&C

LeasedCentennial, CO

Office Building

Fossil & Nuclear/E&I

LeasedCharlotte, NC

Office Building

Fossil & Nuclear

LeasedCherry Hill, NJ

Office Building

E&I/Fossil & Nuclear

LeasedClearfield, UT

Fabrication and Manufacturing

F&M

LeasedConcord, CA

Office Building

E&I

LeasedDecatur, GA

Warehouse

F&M

LeasedDelcambre, LA

Manufacturing Facility

Maintenance

OwnedDerby, United Kingdom

Manufacturing Facility

Fossil & Nuclear

OwnedEl Dorado, AR

Manufacturing Facility

F&M

OwnedFindlay, OH

Office Building & Storage

E&I

LeasedHouston, TX

Office Building

E&C

LeasedHouston, TX

Pipe Fittings Distribution Facility

F&M

LeasedIrvine, CA

Office Building

E&I

LeasedKnoxville, TN

Office Building & Laboratory

E&I

LeasedKnoxville, TN

Warehouse

E&I

LeasedLaPorte, TX

Manufacturing Facility

Maintenance

OwnedLaurens, SC

Pipe Fabrication Facility

F&M

OwnedMaracaibo, Venezuela

Pipe Fabrication Facility

Maintenance

OwnedMilton Keynes,United Kingdom

Office Building

E&C

LeasedMonroeville, PA

Office Building & Storage

E&I

LeasedNew Brunswick, NJ

Manufacturing Facility

F&M

LeasedNew York, NY

Office Building

E&I

LeasedNorwood, OH

Office Building

E&I

OwnedPrairieville, LA

Pipe Fabrication Facility

F&M

OwnedShreveport, LA

Manufacturing Facility

F&M

OwnedShreveport, LA

Piping Components & Manufacturing Facility

F&M

OwnedStoughton, MA

Office Building

Fossil & Nuclear/E&C

LeasedToronto, Canada

Office Building

E&C

LeasedTrenton, NJ

Office Building

Fossil & Nuclear/E&I

LeasedTulsa, OK

Pipe Fabrication Facility

F&M

OwnedWalker, LA

Office Building & Warehouse

F&M

OwnedWalker, LA

Pipe Fabrication Facility

F&M

OwnedWest Monroe, LA

Pipe Fabrication Facility

F&M

Owned  34




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Item 3.
    Legal
    Proceedings  Profit/Loss
  Item 4.
    Submission
    of Matters to Vote of Security Holders    PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High


LowFiscal year ended August 31, 2006First quarter

$
29.43


$
19.88Second quarter


36.08



28.27Third quarter


35.45



25.32Fourth quarter


28.40



19.55Fiscal year ended August 31, 2007First quarter

$
29.93


$
22.39Second quarter


35.73



28.87Third quarter


41.25



28.60Fourth quarter


61.56



37.59Fiscal year ending August 31, 2008First quarter (through November 26, 2007)

$
77.20


$
57.55        35




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Stock
    Performance Graph
    This stock performance information is furnished
    and shall not be deemed to be soliciting material or
    subject to Rule 14A, shall not be deemed filed
    for purposes of Section 18 of the Exchange Act or otherwise
    subject to the liabilities of that section, and shall not be
    deemed incorporated by reference in any filing under the
    Securities Act of 1933, as amended, or the Exchange Act, whether
    made before or after the date of this report and irrespective of
    any general incorporation by reference language in any such
    filing, except to the extent that we specifically incorporate
    the information by reference.
  COMPARISON
    OF FIVE YEAR CUMULATIVE
 TOTAL SHAREHOLDER RETURN*
 Among The Shaw Group Inc., The S&P Smallcap 600 Index
    and The Peer Group
  
  8/02


8/03


8/04


8/05


8/06


8/07The Shaw Group Inc.



100.00




52.90




61.43




125.97




150.21




298.81S&P Smallcap 600



100.00




122.70




140.93




178.27




190.98




218.24Peer Group



100.00




126.12




134.35




209.21




273.33




416.76     THE
    FOREGOING GRAPH REPRESENTS HISTORICAL STOCK PRICE  PERFORMANCE
    AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE
    PERFORMANCE.
   36




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Item 6.
    Selected
    Financial Data    Year Ended August 31,(In millions, except per share amounts)

2007


2006


2005


2004(1)(4)


2003(2)(5)(Restated)


(Restated)


(Restated)


(Restated)Consolidated Statements of OperationsRevenues

$
5,723.7


$
4,775.6


$
3,267.7


$
3,016.3


$
3,238.0Income (loss) from continuing operations

$
(19.0
)

$
50.2


$
17.1


$
(28.2
)

$
16.2Diluted income (loss) per common share from continuing operations

$
(0.24
)

$
0.63


$
0.25


$
(0.49
)

$
0.42Consolidated Balance SheetsTotal assets

$
3,874.9


$
2,537.4


$
2,095.4


$
2,052.6


$
2,006.9Long-term debt and capital lease obligations, net of current
    maturities(3)

$
1,096.8


$
173.5


$
65.4


$
261.2


$
251.7Cash dividends declared per common share

$



$



$



$



$
     (1)
    
    Includes the acquisition of certain assets of Energy Delivery
    Services, Inc., Coastal Engineering and Environmental
    Consultants Inc. and LFG&E International, Inc. in fiscal
    year 2004.(2)
    
    Includes the acquisition of certain assets of Badger
    Technologies, Envirogen, Inc. and LFG&E International, Inc.
    in fiscal year 2003.(3)
    
    Fiscal year 2003 excludes $260.0 million of current
    maturities of long-term debt consisting primarily of the LYONs
    convertible debt of $251.5 million.(4)
    
    Includes restatements for accounting errors primarily related to
    under accrual of lease expenses and incorrect accounting for
    employment agreements. The correction of these errors resulted
    in a reduction of previously reported net income of
    approximately $0.7 million.(5)
    
    Includes restatements for accounting errors primarily related to
    under accrual of lease expenses and incorrect accounting for
    employment agreements resulting in a reduction of previously
    reported net income of approximately $0.3 million.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
    STATEMENTS
 37




---



##### Table of Contents



Overview
            Consolidated
    Results of Operations
  Consolidated
    Revenues:
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
5,723.7


$
4,775.6


$
3,267.7$ Change from prior period


948.1



1,507.9% Change from prior period


19.9
%


46.1
%      38




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##### Table of Contents



Consolidated
    Gross Profit:
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
375.4


$
321.0


$
292.8$ Change from prior period


54.4



28.2% Change from prior period


17.0
%


9.6
%     
    Our Fossil & Nuclear segment recorded a reduction in
    gross profit of $20.6 million on one substantially complete
    major EPC project due to settlements of claims and disputed
    amounts with the owner and major subcontractors and other cost
    increases;
    Our E&C segment recorded a reduction in gross profit of
    $11.3 million on a substantially complete refinery project
    due to settlement on claims with the owner and other cost
    increases;
    Our Maintenance segment reduced gross profit estimates on a
    completed major domestic power project as a result of disputes
    with the owner over project incentives, and separately increased
    loss accruals on two substantially complete offshore production
    platform projects resulting in a combined reduction in gross
    profit of $14.4 million; and
    Our E&I segment recognized significant increases in the
    estimated costs to complete three projects resulting in a
    $12.8 million reduction in gross profit.    Consolidated
    General & Administrative Expenses
    (G&A):
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
274.5


$
225.6


$
190.4$ Change from prior period


48.9



35.2% Change from prior period


21.7
%


18.5
%    39




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##### Table of Contents



Consolidated
    Interest Expense:
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
43.4


$
19.2


$
29.1$ Change from prior period


24.2



(9.9
)% Change from prior period


126.0
%


(34.0
)%     Consolidated
    Income Taxes:
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
10.7


$
17.6


$
17.4$ Change from prior period


(6.9
)


0.2% Change from prior period


(39.2
)%


1.1
%       Consolidated
    Earnings (Losses) from Unconsolidated Entities:
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
(23.7
)

$
2.1


$
3.8$ Change from prior period


(25.8
)


(1.7
)% Change from prior period


NM



(44.7
)%      40




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##### Table of Contents



Consolidated
    Net Income (Loss):
  For the Year Ended August 31,(Dollars in millions)

2007


2006


2005(Restated)


(Restated)Amount

$
(19.0
)

$
50.2


$
15.7$ Change from prior period


(69.2
)


34.5% Change from prior period


(137.9
)%


219.7
%     Segment
    Results of Operations
      Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Revenues:Fossil & Nuclear

$
1,635.6


$
849.0


$
810.7E&I


1,469.3



2,115.3



1,121.0E&C


1,063.9



587.6



372.1Maintenance


1,081.5



904.0



736.8F&M


472.8



319.7



227.1Corporate


0.6







Total revenues

$
5,723.7


$
4,775.6


$
3,267.7 41




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##### Table of Contents



Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Gross profit:Fossil & Nuclear

$
75.0


$
4.6


$
79.0E&I


94.7



197.1



116.9E&C


70.2



22.6



28.8Maintenance


19.9



29.4



26.5F&M


115.0



67.3



41.4Corporate


0.6







0.2Total gross profit

$
375.4


$
321.0


$
292.8Gross profit percentage:Fossil & Nuclear


4.6
%


0.5
%


9.7
%E&I


6.5



9.3



10.4E&C


6.6



3.8



7.7Maintenance


1.8



3.3



3.6F&M


24.3



21.1



18.2Corporate


NM







Total gross profit percentage


6.6
%


6.7
%


9.0
%Income (loss) before income taxes, minority interest,
    earnings (losses) from unconsolidated entities and income (loss)
    from discontinued operations:Fossil & Nuclear

$
42.3


$
(18.1
)

$
56.4E&I


18.3



124.7



54.9E&C


35.2



7.0



14.6Maintenance


9.3



18.1



17.4F&M


91.2



48.2



21.8Investment in Westinghouse


(66.7
)






Corporate


(96.4
)


(99.5
)


(127.2
)Total Income (loss) before income taxes, minority interest,
    earnings (losses) from unconsolidated entities and income (loss)
    from discontinued operations

$
33.2


$
80.4


$
37.9         Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Industry

(In millions)


%


(In millions)


%


(In millions)


%Environmental and Infrastructure

$
1,469.3



26


$
2,115.3



44


$
1,121.0



34Power Generation


2,336.2



41



1,424.0



30



1,391.5



43Chemicals


1,758.0



31



1,103.6



23



695.8



21Other


160.2



2



132.7



3



59.4



2Total revenues

$
5,723.7



100
%

$
4,775.6



100
%

$
3,267.7



100
%  42




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##### Table of Contents



Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Geographic Region

(In millions)


%


(In millions)


%


(In millions)


%United States

$
4,525.1



79


$
4,197.8



88


$
2,847.1



87Asia/Pacific Rim countries


224.3



4



161.4



3



234.4



7Middle East


789.4



14



293.3



6



80.9



3United Kingdom and other European Countries


133.8



2



73.7



2



59.4



2South America and Mexico


22.4



1



24.9



1



20.3



1Canada


15.2







17.3







15.5



Other


13.5







7.2







10.1



Total revenues

$
5,723.7



100
%

$
4,775.6



100
%

$
3,267.7



100
%   Segment
    Analysis  Fiscal Year 2007 Compared to Fiscal
    Year 2006 (Restated)
  Fossil &
    Nuclear Segment
    Revenues
    
    an increase in activity and commencement of work on our Air
    Quality Control Systems (AQCS) FGD on domestic
    U.S. projects that were awarded during fiscal years 2006
    and 2007;
    an increase in activity on two major clean coal power projects
    as these projects reached peak progress levels in fiscal year
    2007; and
    an increase in revenues from our nuclear division due to our
    China nuclear power plant award, domestic support of advanced
    passive AP1000 site specific design and evaluation as well as
    other engineering design work.    
    substantial completion in fiscal year 2006 of two major fossil
    power projects;
    a reduction in spending by key clients on transmission and
    distribution projects and lower revenues from storm restoration
    projects in fiscal year 2007.    Gross
    Profit and Gross Profit Percentage
    
    an increase in gross profit results on several AQCS FGD projects
    and two major coal power projects; and
    the fiscal year 2006 Wolf Hollow adverse litigation ruling
    resulting in $48.2 million reduction of revenue and gross
    profit in fiscal year 2006. 43




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##### Table of Contents




    tentative and final settlements reached on claims and disputed
    amounts with the owner and major subcontractors on one
    substantially complete major EPC fossil power project
    contributing to the reduction in gross profit of
    $25.3 million during fiscal year 2007;
    a reduction of gross profit contributed from a major AQCS FGD
    project as it approached completion during fiscal year 2007;
    a decrease in distribution system activity by key clients,
    reduction in storm restoration projects, losses on transmission
    bid projects, and expected losses on certain long-term
    distribution contracts; and
    an increase in facilities costs, proposal costs and supervisory
    management labor due to growth in business activities in the
    Fossil & Nuclear segment.    Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    E&I
    Segment
    Revenues
      
    activity from two consolidated joint ventures providing services
    to the DOE;
    services provided to commercial customers in the gulf and
    southeast regions of the U.S.;
    a recently consolidated military housing privatization joint
    venture; and
    domestic environmental services performed for
    U.S. government customers.   44




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##### Table of Contents



Gross
    Profit and Gross Profit Percentage
    
    significantly lower levels of disaster relief, emergency
    response and recovery services in fiscal year 2007 compared to
    the significant amount of work performed in fiscal year 2006;
    the negative impact in fiscal year 2007 of additional estimated
    costs to complete certain fixed unit price projects and reversal
    of previously recognized revenue;
    a loss recognized in fiscal year 2007 of $11.2 million on a
    fixed price project in Asia;
    a decrease in gross profit percentage earned on our consolidated
    joint ventures for the DOE; and
    a decrease in gross profit percentage resulting from recording
    no gross profit on the recently consolidated military housing
    privatization joint venture loss contracts now being recognized
    at
    break-even.    
    an increase in demand for services to commercial customers in
    the gulf and southeast regions of the U.S. and improved
    gross profit percentage earned on these services;
    an increase in gross profit and related gross profit percentage
    in federal environmental services; and
    the positive impacts from proposed final indirect billing rates
    for fiscal year 2006 and increased estimated billing rates
    resulting from negotiations relating to a prior fiscal year.  Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    E&C
    Segment
    Revenues
    
    an increase in number of petrochemical projects in progress in
    fiscal year 2007 as compared to fiscal year 2006;
    an increase in volume of proprietary technology-related
    engineering work; and
    an increase in customer furnished materials ($423 million
    and $67 million for the fiscal years ended August 31,
    2007 and 2006, respectively) on a major international
    petrochemical project that was in the
    start-up
    phase in fiscal year 2006. No gross profit is recognized from
    customer furnished materials.   45




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##### Table of Contents



Gross
    Profit and Gross Profit Percentage
    
    contract activity on a major international petrochemical project
    due to the project working near peak activity level for the
    entire 2007 fiscal year;
    an increase in the number of other petrochemical projects in
    progress;
    an increase in volume of proprietary technology-related
    engineering work; and
    recognition, in fiscal year 2006 (prior comparative period), of
    losses on three refining projects totaling $21.0 million.    
    a charge of $11.3 million in fiscal year 2007 primarily
    related to an adjustment of a previously recorded claim and
    other cost increases on a completed contract; and
    contract losses of approximately $9.6 million recorded in
    fiscal year 2007 on a U.S. Gulf Coast EPC furnace contract.    Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    Maintenance
    Segment    Revenues    
    increased market demand for capital construction services in the
    petrochemical industry,
    increased market demand in the power generation industry due to
    increased scopes of services for existing customers,
    major capital modifications at existing customer
    facilities and
    customers schedules of nuclear refueling outages (nuclear
    reactor units generally undergo refueling after 18 to 24 months;
    as a result, revenues in certain fiscal years are impacted by
    the timing of these refueling cycles). 46




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##### Table of Contents



Gross
    Profit and Gross Profit Percentage      Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    F&M
    Segment    Revenues      Gross
    Profit and Gross Profit Percentage   47




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##### Table of Contents



Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    Investment
    in Westinghouse Segment    
    legal and professional fees including costs incurred to obtain
    audited financial statements of Westinghouse in connection with
    the acquisition of $0.3 and $2.9 million, respectively;
    interest expense on the Westinghouse Bonds including discount
    accretion, letter of credit fees and deferred financing cost
    amortization of approximately $8.6 million and
    $30.6 million, respectively; and
    foreign currency translation losses on the Westinghouse Bonds
    and the interest payment forwards, net, of approximately
    $51.7 million and $33.2 million, respectively.          Corporate
  General
    and Administrative Expenses
   48




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##### Table of Contents



Segment
    Analysis  Fiscal Year 2006 (Restated) Compared to
    Fiscal Year 2005 (Restated)
  Fossil &
    Nuclear Segment
  Revenues
    
    an increase in activity on FGD projects; and
    an increase in activity relating to major coal power projects.    
    the Wolf Hollow litigation ruling resulting in
    $48.2 million reduction of revenue for fiscal year
    2006; and
    a decrease in activities due to substantial completion of two
    power projects and a chemical project.  Gross
    Profit and Gross Profit Percentage
    
    the Wolf Hollow litigation ruling reducing gross profit by
    $48.2 million during fiscal year 2006; and
    loss provisions on certain refinery projects, gross profit
    reduction on a power project, and completion of a chemical
    project.    Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    E&I
    Segment
  Revenues
    
    increase in project revenues of $974.9 million associated
    with providing hurricane recovery and restoration work during
    fiscal year 2006; 49




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##### Table of Contents




    revenues of $109.7 million from two recently consolidated
    joint ventures providing services to the DOE; and
    increases in environmental and logistic support services for the
    U.S. government customers of $18.1 million.    
    domestic federal environmental remediation due to a reallocation
    of federal environmental funding to disaster relief funding,
    less work being awarded under existing contracts
    and/or
    delays in funding under existing contracts and property
    management services;
    the substantial completion of a major fixed price contract in
    fiscal year 2005; and
    project services provided to U.S. government customers in
    Iraq due to a competitive bid environment arising from changes
    in government contracting vehicles to more fixed price
    opportunities.  Gross
    Profit and Gross Profit Percentage
    
    an increase in gross profit of $84.4 million associated
    with providing hurricane recovery and restoration work which was
    performed at a lower gross profit percentage than our historical
    services;
    an increase in gross profit from two recently consolidated joint
    ventures providing services to the DOE; and
    an increase in gross profit and related percentage on
    non-hurricane related work resulting from overhead costs being
    allocated to an increasing number of contracts.    
    the positive impact in fiscal year 2005 of an adjustment to the
    estimated costs to complete a major fixed price contract, which
    resulted from cessation of certain operations on the project;
    the application of revised estimated governmental indirect rates
    to contract direct costs for fiscal year 2006 offset by the
    fiscal year 2005 positive impact of gross profit from the
    submission of fiscal year indirect rates, negotiation of
    restructuring cost proposals and other indirect rates to
    contract direct costs;
    lower gross profit and gross profit percentage from domestic
    federal environmental remediation work being awarded and
    executed this fiscal year as compared to last fiscal year,
    together with lower gross profit percentage earned on our
    consolidated joint ventures for the DOE and a higher volume of
    mission support services work compared to the lower volume of
    federal remediation work earning a higher gross profit
    percentage; and
    a decrease in project services supporting the
    U.S. government customers in Iraq.  Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
   50




---



##### Table of Contents



E&C
    Segment
  Revenues
    
    the commencement of a major international petrochemical project,
    including $67.0 million of customer furnished materials;
    the progress on a refinery project; and
    an increase in proprietary technology sales and related services.  Gross
    Profit and Gross Profit Percentage
    
    an increase in gross profits related to the commencement of a
    major international petrochemical plant project; and
    an increase in volume of proprietary technology sales and
    related engineering and a change in fiscal year 2006 of our
    estimates for liability provisions related to contractual
    performance guarantees on sales of technology license agreements
    (see Performance Guarantees in
    Note 19  Long-Term Construction Accounting for
    Revenue and Profit/Loss Recognition Including Claims, Unapproved
    Change Orders and Incentives included in Part II,
    Item 8  Financial Statements and Supplementary
    Data.  Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    Maintenance
    Segment
  Revenues
    
    revenues related to capital construction services for three
    customers in the chemical industry;
    an increase in activity and increased scope for one major
    nuclear project in the U.S.; and
    an increase in maintenance services for several new clients in
    the energy and chemical industries.    Gross
    Profit and Gross Profit Percentage
   51




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##### Table of Contents



Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    F&M
    Segment
  Revenues
      Gross
    Profit and Gross Profit Percentage
    Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
    Corporate
  Income
    (loss) before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and income (loss) from discontinued
    operations
     52




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##### Table of Contents



Unconsolidated
    Entities, Income Taxes and Discontinued Operations
      Liquidity
    and Capital Resources
  Overview
    of Fiscal Years 2007, 2006 (Restated) and 2005
    (Restated)
  and/or
     53




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##### Table of Contents



Year Ended August 31,2007


2006


2005(Restated)


(Restated)Cash flow provided by (used in) operations

$
461,026


$
(94,549
)

$
55,613Cash flow provided by (used in) investing


(1,142,362
)


67,040



(126,462
)Cash flow provided by (used in) financing


865,725



122,972



23,984Cash (to) from variable interest entities


(167
)


2,290



1,343Effects of foreign exchange rate changes on cash


1,725



2,156



(1,201
)   Operating
    Cash Flow
      Investing
    Cash Flow
       54




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##### Table of Contents



Financing
    Cash Flow
          Credit
    Facility
          Other
    Revolving Lines of Credit
    Off
    Balance Sheet Arrangements
   55




---



##### Table of Contents



Commercial
    Commitments
    Amounts of Commitment Expiration by PeriodLess ThanCommercial Commitments(1)

Total


1 Year


1-3 Years


3-5 Years


After 5 YearsLetters of Credit -Domestic and Foreign

$
752.3


$
64.7


$
475.7


$
211.9


$
Surety bonds


875.2



539.8



227.8



78.0



29.6Total Commercial Commitments

$
1,627.5


$
604.5


$
703.5


$
289.9


$
29.6     (1)
    
    Commercial Commitments exclude any letters of credit or bonding
    obligations associated with outstanding bids or proposals or
    other work not awarded prior to September 1, 2007.         56




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##### Table of Contents



Aggregate
    Contractual Obligations
    Payments Due by PeriodLess ThanContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


After 5 YearsLong-term debt obligations

$
1,100.5


$
5.6


$
6.1


$
1.4


$
1,087.4Capital lease obligations


4.2



2.3



1.8



0.1



Operating lease obligations


346.7



77.9



133.0



74.0



61.8Purchase obligations(a)


16.1



9.7



6.4







Pension obligations(b)


82.2



7.1



14.9



15.9



44.3Total contractual cash obligations

$
1,549.7


$
102.6


$
162.2


$
91.4


$
1,193.5     (a)
    
    Purchase obligations primarily relate to IT technical support
    and software maintenance contracts. Commitments pursuant to
    subcontracts and other purchase orders related to engineering
    and construction contracts are not included since such amounts
    are expected to be funded under contract billings.(b)
    
    Pension obligations, representing amounts expected to be paid
    out from plans, noted under the heading After
    5 years are presented for the years
    2013-2017.    Backlog
    of Unfilled Orders
  General. project-by-project
      Fossil & Nuclear and E&C
    Segments.
  E&I Segment.
 57




---



##### Table of Contents



Maintenance Segment.
  F&M Segment.
    August 31,2007


2006Segment

In millions


%


In millions


%Fossil & Nuclear

$
6,768.9



47


$
3,238.4



35E&I


2,589.2



18



2,765.1



30E&C


2,550.8



18



1,412.3



16Maintenance


1,691.6



12



1,250.9



14F&M


713.8



5



408.9



5Total backlog

$
14,314.3



100
%

$
9,075.6



100
%   August 31,2007


2006Industry

In millions


%


In millions


%Environmental and Infrastructure

$
2,589.2



18


$
2,765.1



30Energy


8,417.5



59



4,359.8



48Chemical


3,253.8



23



1,857.8



21Other


53.8







92.9



1Total backlog

$
14,314.3



100
%

$
9,075.6



100
%   58




---



##### Table of Contents



August 31,2007


2006Geographic Region

In millions


%


In millions


%Domestic

$
11,228.1



78


$
7,330.5



81International


3,086.2



22



1,745.1



19Total backlog

$
14,314.3



100
%

$
9,075.6



100
%   August 31,2007


2006Contract Status

In millions


%


In millions


%Signed contracts and commitments

$
14,291.5



100


$
7,285.2



80Letters of intent


22.8







1,790.4



20Total backlog

$
14,314.3



100
%

$
9,075.6



100
%               Inflation
    and Changing Prices
   59




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##### Table of Contents



Critical
    Accounting Policies and Related Estimates That Have a Material
    Effect on Our Consolidated Financial Statements
    Long-Term
    Construction Accounting for Revenue and Profit/Loss Recognition
    Including Claims, Unapproved Change Orders, and
    Incentives
  Nature
    of Estimates Required
  SOP 81-1,
  and/or
  
    Revenues and gross profit from cost-reimbursable, contracts can
    be significantly affected by contract incentives/penalties that
    may not be known or finalized until the later stages of the
    contracts. Substantially all of our revenues from
    cost-reimbursable contracts are based on costs incurred plus
    mark-up fees
    and/or
    incentives, where applicable. Applying the standards included in
    SOP 81-1,
    we recognize revenue on these types of contracts as work is
    performed and costs are incurred. Incentives
    and/or
    penalties are also recognized based on the percentage of
    completion when it is probable that the incentives will be
    earned
    and/or
    penalties incurred.     60




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##### Table of Contents



catch-up
  
    We have fixed-price contracts, for which the accuracy of gross
    profit is dependent on the accuracy of cost estimates and other
    factors.      
    Revenues and gross profit on contracts can be significantly
    affected by change orders and claims that may not be ultimately
    negotiated until the later stages of a contract or after a
    contract is completed. When estimating the amount of total gross
    profit or loss on a contract, we include claims related to our
    customers as adjustments to revenues and claims related to
    vendors, subcontractors and others as adjustments to cost of
    revenues when the recovery of such amounts is probable and the
    amounts can be reasonably estimated. Recording claims ultimately
    increases the gross profit (or reduces the loss) that would
    otherwise be recorded without consideration of the claims. Our
    claims against others are recorded up to the amount of costs
    incurred and include no gross profit until such time as they are
    finalized and approved. In most cases, the claims included in
    determining contract gross profit are less than the actual claim
    that will be or has been presented.   61




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##### Table of Contents



Assumptions
    and Approach Used
  SOP 81-1,
    Revenue
    Recognition  Contract Segmenting
  SOP 81-1.
  Other
    Revenue Recognition and Profit and Loss Estimates
  Nature
    of Estimates Required
    Assumptions
    and Approach Used
  paid-up paid-up
  Nature
    of Estimates Required
   62




---



##### Table of Contents



Assumptions
    and Approach Used
    Litigation,
    Commitments and Contingencies
  Nature
    of Estimates Required
    Assumptions
    and Approach Used
    Income
    Taxes
  Nature
    of Estimates Required, Assumptions and Approach
    Used
    Acquisitions 
    Fair Value Accounting and Goodwill Impairment
  Nature
    of Estimates Required
   63




---



##### Table of Contents



Assumptions
    and Approach Used
      Share-Based
    Compensation  Nature
    of Estimates Required, Assumptions and Approach
    Used
   64




---



##### Table of Contents



Pension
    Plans  Nature
    of Estimates Required, Assumptions and Approach
    Used
            Other
    Recent Accounting Pronouncements
    Item 7A.  Quantitative
    and Qualitative Disclosures about Market Risk
    Interest
    Rate Risk     65




---



##### Table of Contents



Expected Maturity Dates


Fair2008


2009


2010


2011


2012


Thereafter


Total


ValueLong-term debtFixed rate

$
7.7


$
5.8


$
2.1


$
1.5


$



$
426.9


$
444.0


$
457.4Average interest rate


8.1
%


8.3
%


8.3
%


8.3
%



%


2.2
%Variable rate





















$
653.1


$
653.1


$
673.5Average interest rate






















2.398
%     Foreign
    Currency Exchange Rate Risk    and/or
 66




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Reports of Independent Registered Public Accounting Firm: Report on Internal Control over
    Financial Reporting as of August 31, 2007  KPMG
    LLP

68 Report on the 2007 Consolidated
    Financial Statements  KPMG LLP

70 Report on the 2006 and 2005
    Consolidated Financial Statements  Ernst &
    Young LLP

71Consolidated Balance Sheets as of August 31,
    2007 and 2006 (Restated)

72Consolidated Statements of Operations for the
    Fiscal Years Ended August 31, 2007, 2006 (Restated) and
    2005 (Restated)

73Consolidated Statement of Shareholders
    Equity for the Fiscal Years Ended August 31, 2007, 2006
    (Restated) and 2005 (Restated)

74Consolidated Statements of Cash Flows for the
    Fiscal Years Ended August 31, 2007, 2006 (Restated) and
    2005 (Restated)

75Notes to Consolidated Financial Statements

77INDEX TO COMBINED FINANCIAL STATEMENTS OF TOSHIBA NUCLEAR
    ENERGY
    HOLDINGS (US), INC. AND TOSHIBA NUCLEAR ENERGY HOLDINGS (UK)
    LTD.Report of Independent Registered Public
    Accounting Firm  Ernst & Young LLP

155Combined Balance Sheet as of March 31,
    2007

156Combined Statement of Operations for the period
    from October 1, 2006 to March 31, 2007

157Combined Statement of Stockholders Equity
    for the period from October 1, 2006 to March 31,
    2007

158Combined Statement of Cash Flows for the period
    from October 1, 2006 to March 31, 2007

159Notes to Combined Financial Statements

160  67




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Form 10-K.
        Form 10-K:
             68




---



##### Table of Contents



KPMG
    LLP
    69




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           Internal Control  Integrated
    Framework
  Employers Accounting for Defined Benefit
    Pension and Other Postretirement Plans.
  KPMG
    LLP
    70




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           Share-Based Payment
  
  
 71




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
    As of August 31, 2007 and 2006
    (Dollars in thousands)
  2007


2006(Restated)ASSETSCurrent assets:Cash and cash equivalents

$
341,359


$
155,412Restricted and escrowed cash


19,266



43,409Accounts receivable, including retainage, net


771,806



718,721Inventories


184,371



114,436Costs and estimated earnings in excess of billings on
    uncompleted contracts, including claims


398,131



470,708Deferred income taxes


79,146



85,085Prepaid expenses


23,576



8,781Other current assets


34,435



83,312Total current assets


1,852,090



1,679,864Investments in and advances to unconsolidated entities, joint
    ventures and limited partnerships


41,227



53,173Investment in Westinghouse


1,094,538



Property and equipment, at cost


418,514



345,369Less accumulated depreciation


(198,662
)


(167,121
)Property and equipment, net


219,852



178,248Goodwill


513,951



506,592Intangible assets


27,356



31,108Deferred income taxes


22,155



Other assets


103,683



88,369$
3,874,852


$
2,537,354LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
553,273


$
481,351Accrued salaries, wages and benefits


119,219



101,621Other accrued liabilities


200,500



125,430Advanced billings and billings in excess of costs and estimated
    earnings on uncompleted contracts


572,435



331,650Short-term debt and current maturities of long-term debt


7,687



11,688Total current liabilities


1,453,114



1,051,740Long-term debt, less current maturities


9,337



173,534Japanese Yen-denominated long-term bonds secured by Investment
    in Westinghouse, net


1,087,428



Deferred income taxes






18,664Interest rate swap contract on Japanese Yen-denominated bonds


6,667



Other liabilities


62,960



41,678Minority interest


18,825



13,408Contingencies and commitments (Note 13)Shareholders equity:Preferred stock, no par value, 20,000,000 shares
    authorized; no shares issued and outstanding






Common stock, no par value, 200,000,000 shares authorized;
    86,711,957 and 85,866,727 shares issued, respectively; and
    81,197,473 and 80,475,928 shares outstanding, respectively


1,104,633



1,072,589Retained earnings


273,602



292,602Accumulated other comprehensive loss


(36,666
)


(25,363
)Treasury stock, 5,514,484 and 5,390,799 shares, respectively


(105,048
)


(101,498
)Total shareholders equity


1,236,521



1,238,330$
3,874,852


$
2,537,354    72




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
    For the Years Ended August 31, 2007, 2006 and 2005
    (In thousands, except per share amounts)
  2007


2006


2005(Restated)


(Restated)Revenues

$
5,723,712


$
4,775,649


$
3,267,702Cost of revenues


5,348,295



4,454,629



2,974,899Gross profit


375,417



321,020



292,803General and administrative expenses


274,490



225,575



190,362Operating income


100,927



95,445



102,441Interest expense


(12,811
)


(19,177
)


(29,107
)Interest expense on Japanese Yen-denominated bonds including
    accretion and amortization


(30,577
)






Interest income


13,785



5,939



5,571Loss on retirement of debt


(1,119
)






(47,772
)Foreign currency translation losses on Japanese Yen-denominated
    bonds, net


(33,204
)






Other foreign currency transaction gains (losses), net


(5,275
)


(865
)


823Other income (expense), net


1,440



(933
)


5,979Income before income taxes, minority interest, earnings (losses)
    from unconsolidated entities and loss from discontinued
    operations


33,166



80,409



37,935Provision for income taxes


10,747



17,600



17,436Income before minority interest, earnings (losses) from
    unconsolidated entities and loss from discontinued operations


22,419



62,809



20,499Minority interest


(17,699
)


(14,725
)


(7,180
)Income from 20% Investment in Westinghouse, net of income taxes


2,176







Earnings (losses) from unconsolidated entities, net of income
    taxes


(25,896
)


2,142



3,791Income (loss) from continuing operations


(19,000
)


50,226



17,110Loss from discontinued operations, net of income taxes










(1,439
)Net income (loss)

$
(19,000
)

$
50,226


$
15,671Net income (loss) per common share:Basic:Income (loss) from continuing operations

$
(0.24
)

$
0.64


$
0.25Loss from discontinued operations, net of income taxes










(0.02
)Net income (loss)

$
(0.24
)

$
0.64


$
0.23Diluted:Income (loss) from continuing operations

$
(0.24
)

$
0.63


$
0.25Loss from discontinued operations, net of income taxes










(0.02
)Net income (loss)

$
(0.24
)

$
0.63


$
0.22Weighted average shares outstanding:Basic


79,857



78,791



68,673Diluted


79,857



80,289



69,792    73




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
    (Dollars in thousands, except share amounts)
  AccumulatedCommon








Treasury


Unearned


Other





TotalStock


Treasury


Common


Stock


Stock-Based


Comprehensive


Retained


ShareholdersShares


Stock Shares


Stock Amount


Amount


Compensation


Income (Loss)


Earnings


EquityBalance, August 31, 2004, as previously reported


69,101,493



(5,331,655
)

$
772,077


$
(99,913
)

$
(6,072
)

$
(15,157
)

$
229,136


$
880,071Cumulative effect of accounting errors










(340
)














(2,431
)


(2,771
)Balance, August 31, 2004, (Restated)


69,101,493



(5,331,655
)


771,737



(99,913
)


(6,072
)


(15,157
)


226,705



877,300Net income


























15,671



15,671Other comprehensive income (loss):Foreign currency translation adjustments






















(3,872
)






(3,872
)Change in unrealized net gains (losses) on hedging activities,
    net of tax of $5






















(210
)






(210
)Additional pension liability, not yet recognized in net periodic
    pension expense, net of tax expense of $






















(12,513
)






(12,513
)Comprehensive income (loss)






























(924
)Shares issued in public equity offerings


14,067,500







260,270



















260,270Exercise of options


378,715







3,248



















3,248Tax benefits from stock based compensation










506



















506Stock-based compensation


741,296







8,745







(9,134
)










(389
)Amortization of stock-based compensation


















4,009











4,009Balance, August 31, 2005, (Restated)


84,289,004



(5,331,655
)

$
1,044,506


$
(99,913
)

$
(11,197
)

$
(31,752
)

$
242,376


$
1,144,020Net income (loss)


























50,226



50,226Other comprehensive income (loss):






























Foreign currency translation adjustments






















(495
)






(495
)Change in unrealized net gains (losses) on hedging activities,
    net of tax of $5






















(7
)






(7
)Decrease in pension liability, not yet recognized in net
    periodic pension expense, net of tax benefit of $






















6,891







6,891Comprehensive income (loss)






























56,615Exercise of options


1,168,023







18,675



















18,675Tax benefits from stock based compensation










3,586



















3,586Stock-based compensation


409,700



(59,144
)


24,340



(1,585
)


(7,321
)










15,434Reclassification of unearned compensation due to the adoption of
    SFAS 123R










(18,518
)






18,518











Balance, August 31, 2006, (Restated)


85,866,727



(5,390,799
)

$
1,072,589


$
(101,498
)

$



$
(25,363
)

$
292,602


$
1,238,330Net income (loss)


























(19,000
)


(19,000
)Other comprehensive income:Foreign currency translation adjustments






















1,404







1,404Change in unrealized net gains (losses) on hedging activities,
    net of tax of $2,667






















(4,000
)






(4,000
)Decrease in pension liability, not yet recognized in net
    periodic pension expense, net of tax expense of $2,003






















2,939







2,939Comprehensive income (loss)






























(18,657
)Adjustment upon initial adoption of SFAS 158, net of tax
    benefit of $7,945






















(11,646
)






(11,646
)Exercise of options


569,152







8,815



















8,815Tax benefits from stock based compensation










3,850



















3,850Stock-based compensation


276,078



(123,685
)


19,379



(3,550
)














15,829Balance, August 31, 2007


86,711,957



(5,514,484
)

$
1,104,633


$
(105,048
)

$



$
(36,666
)

$
273,602


$
1,236,521    74




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended August 31, 2007, 2006 and 2005
    (Dollars in thousands)
  2007


2006


2005(Restated)


(Restated)Cash flows from operating activities:Net income (loss)

$
(19,000
)

$
50,226


$
15,671Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


41,303



35,272



31,388Provision for (benefit from) deferred income taxes


(31,030
)


3,351



8,184Stock-based compensation expense


19,379



18,018



4,321Accretion of discount on long-term debt and amortization of
    deferred financing costs


8,006



1,124



3,712Amortization of contract adjustments


(3,361
)


(3,575
)


(11,098
)Provision for uncollectible accounts receivable


17,134



10,285



2,780(Earnings) losses from unconsolidated entities, net of taxes


(4,609
)


(2,142
)


(3,790
)Impairment of assets


8,041



5,130



Distributions from unconsolidated entities


3,485



1,956



Foreign currency transaction (gains) losses, net


5,275



865



(919
)Foreign currency translation losses, net (Westinghouse)


33,204







Loss on retirement of debt


1,119







47,772Write-off of claims receivable






48,155



Minority interest


17,699



14,724



7,179Payments for financed insurance premiums


(13,033
)


(9,765
)


(10,582
)Return on capital to joint venture partner


(11,778
)


(12,210
)


Impairment of investments in unconsolidated entities


47,215







Pension, net periodic costs


(5,342
)


(6,307
)


(5,957
)Other


(1,684
)


(778
)


(2,555
)Changes in assets and liabilities, net of effects of
    acquisitions and consolidation of variable interest entities:(Increase) decrease in receivables


(46,393
)


(296,235
)


30,311(Increase) decrease in costs and estimated earnings in excess of
    billings on uncompleted contracts, including claims


75,802



(103,999
)


(30,803
)(Increase) in inventories


(66,895
)


(17,135
)


(17,616
)(Increase) decrease in other current assets


55,505



(33,497
)


12,547(Increase) decrease in prepaid expenses


(14,803
)


(2,788
)


4,254(Increase) in other assets


(22,631
)


(24,631
)


(9,222
)Increase in accounts payable


43,475



127,205



4,419Increase in accrued liabilities


89,803



53,864



5,077Increase (decrease) in advanced billings and billings in excess
    of costs and estimated earnings on uncompleted contracts


240,775



39,924



(74,604
)Increase (decrease) in deferred revenue


(11,264
)


1,933



2,359Increase in other long-term liabilities


5,629



6,481



42,785Net cash provided by (used in) operating activities


461,026



(94,549
)


55,613Cash flows from investing activities:Proceeds from sale of businesses, net of cash surrendered






1,242



14,108Purchases of businesses, net of cash received


(14,114
)


(720
)


Purchases of property and equipment


(65,184
)


(49,118
)


(30,201
) 75




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 For the
    Years Ended August 31, 2007, 2006 and 2005 
    (Continued)
  2007


2006


2005(Restated)


(Restated)Investment in and advances to unconsolidated entities and joint
    ventures


(10,448
)


(19,244
)


(13,335
)Investment in Westinghouse


(1,085,913
)






Distributions from unconsolidated entities


4,878



3,785



14,930Acquisition costs






(2,188
)


Cash received from restricted and escrowed cash


84,894



193,722



212,474Cash deposited into restricted and escrowed cash


(60,789
)


(65,230
)


(327,800
)Proceeds from sale of property and equipment


4,314



4,791



3,362Net cash provided by (used in) investing activities


(1,142,362
)


67,040



(126,462
)Cash flows from financing activities:Proceeds from issuance of Japanese Yen-denominated bonds


1,049,465







Purchase of treasury stock


(3,550
)


(1,584
)


Repayment of debt and capital leases


(32,102
)


(4,878
)


(279,828
)Proceeds from issuance of debt


4,073



5,305



3,726Payments for deferred financing costs


(14,139
)


(2,072
)


(4,886
)Issuance of common stock


8,815



18,675



263,849Contribution of capital from joint venture partner


100







Tax benefits from stock based compensation


3,850



3,586



Proceeds from revolving credit agreements


783,865



1,361,055



463,551Repayments of revolving credit agreements


(934,652
)


(1,257,115
)


(422,428
)Net cash provided by financing activities


865,725



122,972



23,984Cash (to) from variable interest entities


(167
)


2,290



1,343Effects of foreign exchange rate changes on cash


1,725



2,156



(1,201
)Net change in cash and cash equivalents


185,947



99,909



(46,723
)Cash and cash equivalents  beginning of year


155,412



55,503



102,226Cash and cash equivalents  end of year

$
341,359


$
155,412


$
55,503Supplemental disclosures:Cash payments for:Interest (net of capitalized interest)

$
23,072


$
19,404


$
40,206Income taxes

$
8,879


$
4,035


$
5,133Non-cash investing and financing activities:Issuance of restricted stock

$
3,709


$
15,908


$
9,445Financed insurance premiums

$
11,138


$
10,068


$
11,034Interest rate swap contract on Japanese Yen-denominated bonds

$
6,667


$



$
Acquisition of businesses through issuance of debt

$
7,067


$



$
Property and equipment acquired through issuance of debt

$



$
2,716


$
    76




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Description
    of Business and Summary of Significant Accounting
    Policies  Restatement
    of Prior Period Financial Statements
  Form 8-K Form 10-K/A Form 10-Q/A Form 10-Q Form 10-Q/A
  Form 10-Q
  Previous
    Restatement of Historical Financial Statements
  Form 10-K Form 10-K Form 10-K, Form 10-K Form 10-K Form 10-K/A
  Description
    of Business
     77




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal
    Year-End
    Nature
    of Operations and Types of Contracts
  mark-up mark-up agreed-upon
    
    Cost-plus contract  A contract under which we
    are reimbursed for allowable or otherwise defined costs incurred
    plus a fee or
    mark-up. The
    contracts may also include incentives for various performance
    criteria, including areas as quality, timeliness, ingenuity,
    safety and cost-effectiveness. In addition, our costs are
    generally subject to review by our customers and regulatory
    audit agencies and such reviews could result in costs being
    disputed as non-reimbursable under the terms of the contract.
    Target-price contract  A contract under which
    we are reimbursed for costs plus a fee consisting of two parts:
    (1) a fixed amount, which does not vary with performance,
    but may be at risk when a target price is exceeded; and
    (2) an award amount based on the performance and
    cost-effectiveness of the project. As a result, we are generally
    able to recover cost overruns on these contracts from actual
    damages for late delivery or the failure to meet certain
    performance criteria. Target-price contracts also generally
    provide for sharing of costs in excess of or savings for costs
    less than the target. In some contracts, we may agree to share
    cost overruns in excess of our fee, which could result in a loss
    on the project.    
    Firm fixed-price contract  May include
    contracts in which the price is not subject to any cost or
    performance adjustments and contracts where certain risks are
    shared with clients such as labor costs, commodity pricing
    changes. As a result, we may benefit or be penalized for cost
    variations from our original estimates. However, these contract
    prices may be adjusted for changes in scope of work, new or
    changing laws and regulations and other events negotiated.
    Maximum price contract  A contract that
    provides at the outset for an initial target cost, an initial
    target profit and a price ceiling. The price is subject to cost
    adjustments incurred, but the adjustment would generally not
    exceed the price ceiling established in the contract. In
    addition, these contracts usually include provisions whereby we
    share cost savings with our clients.
    Unit-price contract  A contract under which we
    are paid a specified amount for every unit of work performed. A
    unit-price contract is essentially a firm fixed-price contract
    with the only variable being the number of units of work
    performed. Variations in unit-price contracts include the same
    type of variations as firm fixed-price contracts. We are
    normally awarded these contracts on the basis of a total price
    that is the sum of the product of the specified units and the
    unit prices. 78




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Operating
    Cycle
    Use of
    Estimates
    
    contract revenues, costs and profits and the application of
    percentage-of-completion method of accounting;
    provisions for uncollectible receivables and customer claims and
    recoveries of costs from subcontractors, vendors and others;
    recoverability of inventories and application of lower of cost
    or market accounting;
    provisions for income taxes and related valuation allowances;
    recoverability of goodwill;
    recoverability of other intangibles and long-lived assets and
    related estimated lives;
    recoverability of equity method investments;
    valuation of assets acquired and liabilities assumed in
    connection with business combinations;
    valuation of defined benefit pension plans;
    accruals for estimated liabilities, including litigation and
    insurance accruals;
    consolidation of variable interest entities; and
    valuation of stock-based compensation.  Principles
    of Consolidation
   79




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Acquisitions
    Acquisition
    of Investment in Westinghouse
    Acquisition
    of Gottlieb, Barnett & Bridges
    Acquisition
    of Mid-States Pipe Fabrication, Inc.
    Acquisition
    of EzeFlow (NJ) Inc.
    Discontinued
    Operations
    Cash
    and Cash Equivalents
    Accounts
    Receivable
   80




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Costs
    and Estimated Earnings in Excess of Billings on Uncompleted
    Contracts, Including Claims, and Advanced Billings and Billings
    in Excess of Costs and Estimated Earnings on Uncompleted
    Contracts
    Inventories
  first-in,
  Property
    and Equipment
      Transportation equipment


5-15 YearsFurniture, fixtures and software


3-15 YearsMachinery and equipment


3-18 YearsBuildings and improvements


5-40 Years   Investments
   81




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Long-Lived
    Assets
    Goodwill
    Intangible
    Assets
   82




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Assets
    of Deferred Compensation Plans
  No. 97-14,
  Long-Term
    Construction Accounting for Revenue and Profit/Loss Recognition
    Including Claims, Unapproved Change Orders, and
    Incentives
  81-1, (SOP 81-1)
     83




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Revenue
    Recognition  Contract Segmenting
  SOP 81-1.
  Other
    Revenue Recognition and Profit and Loss Estimates
    paid-up paid-up
 84




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  paid-up
    Cost
    Estimates
    General
    and Administrative Expenses
    Derivative
    Instruments and Hedging Activities
   85




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
  Other
    Comprehensive Income
      Recently
    Adopted Accounting Standard
      Insurance
    Programs
   86




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred
    Financing Costs
    Deferred
    Acquisition Costs
    Share-Based
    Compensation
       87




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the YearEndedDollars in thousands, except per share amounts

August 31, 2005(Restated)Net income:As reported

$
15,671Add: Share-based compensation expense reported in net income,
    net of taxes


3,065Deduct: Share-based compensation expense under the fair value
    method for all awards, net of taxes


(11,099
)Pro forma

$
7,637Basic net income per share:As reported

$
0.23Add: Share-based compensation expense reported in net income,
    net of taxes


0.04Deduct: Share-based compensation expense under the fair value
    method for all awards, net of taxes


(0.16
)Pro forma

$
0.11Diluted net income per share:As reported

$
0.22Add: Share-based compensation expense reported in net income,
    net of taxes


0.04Deduct: Share-based compensation expense under the fair value
    method for all awards, net of taxes


(0.16
)Pro forma

$
0.11   Income
    Taxes
    Contingencies
    and Commitments
  and/or
 88




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  LandBank
    Assets and Liabilities
    Fair
    Value of Financial Instruments
    Reclassifications
    Note 2 
    Acquisition
    of Investment in Westinghouse and Related Agreements  Summary
    of Acquisition and Results of Operations
      Investment
    in Westinghouse
   89




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Put
    Option Agreement
        Commercial
    Relationship Agreement
   90




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Shareholder
    Agreement and Dividend Policy
    Westinghouse
    Bonds
     91




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3 
    Restricted
    and Escrowed Cash    
    $11.0 million and $40.2 million, respectively, in
    connection with a power project with which we had joint
    authority with another party to the contract. The project was
    substantially completed in 2006. Subsequent to August 31,
    2007, all claims and disputes related to this project have been
    settled and the current cash balance related to the
    $11.0 million is no longer restricted;
    $1.2 million and $1.1 million, respectively, related
    to deposits designated to fund remediation costs associated with
    a sold property; and
    $7.1 million and $2.1 million as of August 31,
    2007 and 2006, respectively, is related to escrow amounts
    contractually required by various other projects.  Note 4 
    Inventories,
    Accounts Receivable and Concentrations of Credit Risk    August 31,2007


2006     (Restated)Weighted








WeightedAverage


FIFO


Total


Average


FIFO


TotalRaw materials

$
8,541


$
93,101


$
101,642


$
5,417


$
47,847


$
53,264Work in process


8,076



12,687



20,763



1,295



7,169



8,464Finished goods


61,966







61,966



52,708







52,708$
78,583


$
105,788


$
184,371


$
59,420


$
55,016


$
114,436     August 31,2007


2006(Restated)Trade accounts receivable, net

$
683,125


$
597,640Unbilled accounts receivable


4,244



6,081Retainage


84,437



115,000Total accounts receivable, including retainage, net

$
771,806


$
718,721  92




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(Restated)Beginning balance, September 1

$
20,586


$
18,561Provision


17,134



10,285Write offs


(7,916
)


(7,023
)Other


(3,170
)


(1,237
)Ending balance, August 31

$
26,634


$
20,586   Concentrations
    of Credit
      Note 5 
    Property and Equipment:
    August 31,2007


2006(Restated)Transportation equipment

$
16,373


$
15,882Furniture, fixtures and software


116,546



99,945Machinery and equipment


156,807



140,109Buildings and improvements


86,406



64,570Assets acquired under capital leases


9,148



8,382Land


7,966



7,344Construction in progress


25,268



9,137418,514



345,369Less: accumulated depreciation


(198,662
)


(167,121
)Property and equipment, net

$
219,852


$
178,248     Note 6 
    Equity
    Method Investments and Variable Interest Entities   93




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Equity
    Method Investments
    Balance Sheet

June 30, 2007Current assets

$
1,405,687Noncurrent assets


6,144,378Current liabilities


1,065,482Noncurrent liabilities


901,598Minority interest


4,521   October 16, 2006(Acquisition Date)Statement of Operations

to June 30, 2007Revenues

$
1,712,165Gross profit


433,608Income from continuing operations before income taxes


31,151Net income


17,868     At August 31,Balance Sheets

2007


2006(Restated)Current assets

$
234,358


$
145,071Noncurrent assets


979,881



927,938Current liabilities


192,467



104,470Noncurrent liabilities


783,526



776,053   For the Year Ended August 31,Statement of Operations

2007


2006


2005(Restated)


(Restated)Revenues

$
429,451


$
580,837


$
620,031Gross profit


49,991



62,813



54,887Income from continuing operations before income taxes


44,648



38,236



42,309Net income


44,648



38,236



42,309  94




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Ownership


At August 31,Percentage


2007


2006(Restated)Investment in Westinghouse


20%


$
1,094,538


$
Privatization entities


10% - 90%



10,057



24,298KB Home/Shaw Louisiana, LLC


50%



5,315



8,708Mississippi Space Services LLC


45%



6,901



6,006Other


23% - 50%



15,873



11,080Total investments






1,132,684



50,092Long-term advances to and receivables from unconsolidated
    entities:Shaw YPC Piping (Nanjing) Co. LTD


50%



3,081



3,081Total investments in and advances to unconsolidated entities,
    joint ventures and limited partnerships





$
1,135,765


$
53,173   EITF 96-16,
    For the Year EndedAugust 31,2007


2006


2005(Restated)


(Restated)Investment in Westinghouse

$
2,176


$



$
Privatization entities


(24,838
)


2,774



(361
)KB Home/Shaw Louisiana LLC


(3,298
)


(1,529
)


Mississippi Space Services LLC


1,347



853



664Other


893



44



3,488Total earnings (losses) from unconsolidated entities, net income
    of taxes

$
(23,720
)

$
2,142


$
3,791   Variable
    Interest Entities
     95




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    
    We became the primary beneficiary of PFH Management, LLC, and
    American Eagle Design-Build Studio. We have consolidated these
    entities, which resulted in $28.3 million and
    $28.3 million of additional assets and liabilities,
    respectively, being recorded in our consolidated balance sheet
    as of August 31, 2007. We also recognized additional
    revenues of $28.4 million in our consolidated statement of
    operations for the year ended August 31, 2007. As a result
    of the impairment charge discussed below, the subsequent
    consolidation of these entities had no effect on net income.
    We concluded that American Eagle Northwest, LLC and American
    Eagle Communities Midwest, LLC are not VIEs, although previously
    disclosed as being unconsolidated VIEs. This change had no
    impact on our financial statements, as these entities continue
    to be accounted for under the equity method.    Consolidated
    VIEs
  
    In November 1993, Shaw-Nass Middle East, W.L.L. (Shaw-Nass) was
    created to support the fabrication and distribution of pipe in
    the Middle East and is located in Bahrain. We acquired a 49%
    equity interest in the joint venture, and have made advances to
    the entity and have issued interest bearing loans to fund
    working capital and to finance certain equipment purchases. This
    entity which is included in our Fabrication &
    Manufacturing (F&M) segment had total assets of
    approximately $27.8 million and total liabilities of
    $21.3 million as of August 31, 2007. The creditors of
    Shaw-Nass, which are currently limited to vendors and suppliers,
    do not have recourse to our general credit. Our maximum exposure
    to loss is limited to our equity interest and outstanding
    advances and loans to Shaw-Nass, which totaled $3.8 million
    as of August 31, 2007.
    In April 2003, our subsidiary, Badger Technologies Holdings
    L.L.C. contributed the right to license certain technology to
    acquire a 50% equity interest in a joint venture, Badger
    Licensing LLC. This entity had total assets and liabilities of
    $19.2 million and $7.6 million as of August 31,
    2007, respectively and is included in our E&C segment. The
    creditors of the entity, which are currently limited to vendors
    and suppliers, do not have recourse to our general credit. Our
    exposure to losses is limited to our equity interest of
    $6.0 million as of August 31, 2007 and certain costs
    incurred on behalf of the joint ventures operations we
    have agreed to absorb, estimated to be approximately
    $3.6 million annually.
    In June 2003, we contributed $3.2 million of cash to PFH
    Management, LLC for a 30% equity interest. This entity was
    established to undertake the privatization of military family
    housing for Air Force personnel and their families under a
    design, build, and rental housing contract at Patrick Air Force
    Base, Florida. PFH Management, LLC has an 80% equity interest in
    Patrick Family Housing, LLC and is the general managing member
    for Patrick Family Housing, LLC. In April 2005, Patrick Family
    Housing, LLC, successfully obtained financing of approximately
    $75.4 million through a private placement bond offering
    from third-party lenders. The bonds are secured by first liens
    on the rental 96




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  properties without recourse to the general credit of the equity
    partners. During 2007, we made additional advances to the
    entity, which resulted in us becoming the primary beneficiary.
    As of August 31, 2007, this entity had total assets and
    liabilities of approximately $3.1 million and approximately
    $3.1 million, respectively. Our exposure to losses is
    limited to our equity interest, which was reduced to zero
    through an impairment loss during 2007 (see below), and an
    indemnity agreement (see below).  
    In January 2005, American Eagle Design-Build Studio was formed
    to provide general contractor services to the renovation efforts
    on several of the Privatization entities. We hold a 50% equity
    interest in the joint venture. During 2007, we made additional
    advances to the entity, which resulted in us becoming the
    primary beneficiary. As of August 31, 2007, this entity had
    total assets and liabilities of approximately $25.2 million
    and approximately $25.2 million, respectively. Our exposure
    to losses is limited to our equity interest, which was reduced
    to zero through an impairment loss during 2007 (see below) and
    the exposure related to the guarantee (see below).
    In August 2004, Liquid Solutions LLC was formed to provide
    solutions for the management and treatment of wastewater. We
    have a 50% equity interest in this entity. This entity had total
    assets and liabilities of $9.0 million and
    $24.4 million, respectively, as of August 31, 2007
    reflected in our E&I segment. Our exposure to losses
    consists of our equity interest and note receivable with accrued
    interest totaling $19.7 million as of August 31, 2007.
    In October 2006, NEH was created to issue the Westinghouse Bonds
    and hold our 20% equity interest in Westinghouse (see
    Note 2  Acquisition of Investment in
    Westinghouse and Related Agreements).  Unconsolidated
    VIEs  Equity Method
  
    In August 2004, we contributed cash of $3.8 million to
    Little Rock Family Housing, LLC for a 50% equity interest. This
    entity was established to undertake the privatization of
    military family housing for Air Force personnel and their
    families under a design, build and rental housing contract in
    Little Rock, Arkansas. Under the arrangement, Little Rock Family
    Housing, L.L.C. is obligated to absorb the majority of the
    expected losses from the project; however, we are not the
    primary beneficiary. In October 2004, Little Rock Family
    Housing, L.L.C. successfully obtained financing of approximately
    $65.3 million through a private placement bond offering
    from third-party lenders. The bonds are secured by first liens
    on the rental properties without recourse to the general credit
    of the partners. As of August 31, 2007, this entity had
    total assets and liabilities of approximately $93.1 million
    and $74.5 million, respectively. Our exposure to losses is
    limited to our equity interest, which was reduced to zero
    through an impairment loss during 2007 (see below) and the
    exposure related to an indemnity agreement (see below).
    In October 2004, we contributed cash of $5.0 million to
    Hanscom Family Housing, LLC for a 50% equity interest. This
    entity was established to undertake the privatization of
    military family housing for Air Force personnel and their
    families under a design, build and rental housing contract
    twenty miles northwest of Boston, Massachusetts. Under the
    arrangement, Hanscom Family Housing, LLC is obligated to absorb
    the majority of the expected losses from the project; however,
    we are not the primary beneficiary. In October 2004, Hanscom
    Family Housing, LLC successfully obtained financing of
    approximately $168.2 million through a private placement
    bond offering from third-party lenders. The bonds are secured by
    first liens on the rental properties without recourse to the
    general credit of the partners. As of August 31, 2007, this
    entity had total assets and liabilities of $221.9 million
    and $197.1 million, respectively. Our exposure to losses is
    limited to our equity interest, which was reduced to zero
    through an impairment loss during 2007 (see below) and the
    exposure related to an indemnity agreement (see below). 97




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    In February 2005, we contributed cash of $2.8 million to
    American Eagle Northwest, LLC for a 50% equity interest. This
    entity was established to undertake the privatization of
    military family housing for U.S. Navy personnel and their
    families under a design, build and rental housing contract in
    the State of Washington. American Eagle Northwest, LLC has a
    minority interest in Pacific Northwest Communities, LLC (PNC) of
    which the United States Navy has a majority interest. Under the
    arrangement, American Eagle Northwest, LLC is obligated to
    absorb the majority of the expected losses from PNCs
    contract with the United States Navy; however, we are not the
    primary beneficiary of American Eagle Northwest, LLC. We also,
    along with our American Eagle Northwest, LLC equity partner,
    have guaranteed certain items of the performance of the entity
    under the contract with the United States Navy. As of
    August 31, 2007, our maximum exposure to loss consisted of
    our equity investment of $6.8 million and the exposure
    related to the guarantee (see below). In February 2005, American
    Eagle Northwest, LLC successfully obtained financing of
    approximately $226.0 million through a private placement
    bond offering from third-party lenders. The bonds are secured by
    first liens on the rental properties without recourse to the
    general credit of the equity partners. As of August 31,
    2007, this entity had total assets and liabilities of
    approximately $288.4 million and approximately
    $230.8 million, respectively.
    During December 2005, the KB Home/Shaw Louisiana, LLC joint
    venture was formed and is owned 50% by Shaw and 50% by KB Home
    to acquire, develop and sell residential real estate. Our
    maximum exposure to loss consisted of our equity investment of
    $5.3 million. As of August 31, 2007, this entity had
    total assets and liabilities of approximately $30.5 million
    and $15.3 million, respectively.
    In May 2006 we invested $2.0 million for a one-third equity
    interest in TerraVista Lakes, LLC, an entity formed to own,
    develop and sell real estate. Our maximum exposure to loss
    consisted of our equity investment of $3.1 million. As of
    August 31, 2007, this entity had total assets and
    liabilities of approximately $30.8 million and
    $21.6 million, respectively.  Guarantees
    Related to Military Housing Privatization Construction
    Entities
       98




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Impairment
    Recognized in Fiscal Year 2007
  and/or
   99




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Related
    Party Transactions
    Shaw YPCDuke


PipingPrivatization


Cogema


(Nanjing)Entities


S&W


Co. LTD


OtherRevenue from unconsolidated entities for years ended2007

$
28,674


$



$



$
5,6512006


482



18,760







5,4612005


519



36,806







489Accounts receivable from unconsolidated entities as of
    August 31,2007


24,780







58



4,2022006


773







594



1,864Advances to unconsolidated entities as of August 31,2007










3,081



2006










3,081



  100




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7 
    Goodwill,
    Other Intangibles and Contract Adjustments and Accrued Contract
    Losses  Goodwill
    Fossil andE&I


E&C


Nuclear


Maintenance


F&M


TotalBalance at August 31, 2005, as previously reported

$
186,878


$
262,142


$



$
42,371


$
15,062


$
506,453Revision of reportable segments






(150,715
)


150,715











Balance at August 31, 2005

$
186,878


$
111,427


$
150,715


$
42,371


$
15,062


$
506,453Currency translation adjustment






88











395



483Sale of Shaw Field Services














(344
)






(344
)Balance at August 31, 2006

$
186,878


$
111,515


$
150,715


$
42,027


$
15,457


$
506,592Currency translation adjustment






347











531



878Purchase of GBB


7,296



















7,296Purchase of EzeFlow


















1,323



1,323Impairment of Energy Delivery Services, Inc. (EDS)










(2,138
)










(2,138
)Balance at August 31, 2007

$
194,174


$
111,862


$
148,577


$
42,027


$
17,311


$
513,951       Annual
    Goodwill Impairment Analysis
    Intangible
    Assets
   101




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Proprietary Technologies,Patents and Tradenames


Customer RelationshipsGross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationAugust 31, 2005 balance

$
44,261


$
(12,122
)

$
2,752


$
(868
)Adjustments


449











Amortization






(3,078
)






(286
)August 31, 2006 balance

$
44,710


$
(15,200
)

$
2,752


$
(1,154
)Adjustments


(49
)






(736
)


306Amortization






(3,046
)






(227
)August 31, 2007 balance

$
44,661


$
(18,246
)

$
2,016


$
(1,075
)     Proprietary Technologies,


CustomerPatents and Tradenames


Relationships2008

$
3,015


$
2022009


2,911



2022010


2,753



2022011


2,737



2022012


2,735



133Thereafter


12,264



Total

$
26,415


$
941   Contract
    Adjustments and Accrued Contract Losses
   102




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 8 
    Long-Term
    Debt and Revolving Lines of Credit    August 31, 2007


August 31, 2006Short-term


Long-term


Short-term


Long-termSenior Notes, unsecured,
    103/4%
    interest, due March 15, 2010, issued at 98.803% of face
    value, with an early repurchase option

$



$



$



$
15,066Notes payable; 0% interest; due on January 10, 2009; net of
    discount of $0.4 million


2,500



2,449







Notes payable of a VIE; interest payable monthly at an average
    interest rate of 8.2% and 8.3% and monthly payments of
    $0.02 million and $0.08 million, through May and June
    2011, respectively


871



3,412



802



4,283Credit Facility














145,517Other Credit Facility Borrowings and Notes payable of a VIE;
    interest payable at BIBOR plus 2.5%, monthly payment of
    $0.1 million, through January 2008


783







6,772



612Other notes payable


1,434



1,667



408



4,623Other short-term debt










1,895



Capital lease obligations


2,099



1,809



1,811



3,433Subtotal


7,687



9,337



11,688



173,534Westinghouse Bonds (see description below)






1,087,428







Total

$
7,687


$
1,096,765


$
11,688


$
173,534  103




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##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Capital


Long-termLease Obligations


Debt2008

$
2,325


$
5,5882009


1,621



4,2282010


208



1,8602011


78



1,4402012






Thereafter






1,087,428Subtotal


4,232



1,100,544Less: amount representing interest


(324
)


Total

$
3,908


$
1,100,544   Senior
    Notes
       104




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Westinghouse
    Bonds
    August 31,2007Westinghouse Bonds, face value 50.98 billion JPY due
    March 15, 2013; interest only payments; coupon rate of
    2.20%;

$
426,875Westinghouse Bonds, face value 78 billion JPY due
    March 15, 2013; interest only payments; coupon rate of
    0.70% above the six-month JPY LIBOR rate (1.07% as of
    August 31, 2007)


653,125Original Discount on Westinghouse Bonds


(30,535
)Accumulated Discount Accretion


4,169Increase in net long-term debt due to foreign currency
    translation


33,794Total long-term portion of debt

$
1,087,428     Credit
    Facility
         105




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Total Credit Facility

$
850.0Less: outstanding performance letters of credit


(526.3
)Less: outstanding financial letters of credit


(204.7
)Less: outstanding revolving credit loans


Remaining availability under the Credit Facility

$
119.0       
    a maximum leverage ratio of 2.5x our earnings before interest,
    income taxes, depreciation and amortization (EBITDA) as defined
    in the Credit Facility agreement, is adjusted for certain
    non-cash items and for the pro forma impact of acquisitions and
    dispositions of operations and assets; (Amendment IV to the
    Credit Facility increased the maximum leverage ratio to 2.75x
    our EBITDA for quarters ending prior to August 31, 2007 and
    2.5x on or thereafter);
    a minimum fixed charge coverage ratio of 2.5x EBITDA; and
    (Amendment IV to the Credit Facility decreased the minimum
    fixed charge coverage ratio to 2.25x our EBITDA for quarters
    ending on or prior to February 29, 2008 and 2.5x
    thereafter); and
    a minimum net worth as defined by the Credit Facility agreement.       106




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
    Revolving Lines of Credit
     107




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 9 
    Income
    Taxes    For the Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Income from continuing operations before income taxes, minority
    interest, earnings (losses) from unconsolidated entities and
    loss from discontinued operations

$
10,747


$
17,600


$
17,436Income from 20% investment in Westinghouse


1,397







Earnings (losses) from unconsolidated entities


(18,221
)


1,851



395Total income tax from continuing operations


(6,077
)


19,451



17,831Loss from and impairment of discontinued operations










(517
)Shareholders equity, for compensation expense for tax
    purposes in excess of amounts recognized for financial reporting


(3,850
)


(3,586
)


(506
)Shareholders equity, for liability for pension plan


(5,942
)






Shareholders equity, for net unrealized gain on derivative
    instrument


(2,667
)






Total income taxes

$
(18,536
)

$
15,865


$
16,808     For the Fiscal Year Ended August 31,2007


2006


2005(Restated)


(Restated)Domestic

$
(8,176
)

$
44,559


$
23,714Foreign


41,342



35,850



14,221Total

$
33,166


$
80,409


$
37,935     For the Fiscal Year Ended August 31,Current


Deferred


TotalYear ended August 31, 2007:U.S. federal

$



$
(3,695
)

$
(3,695
)State and local


3,482



(1,002
)


2,480Foreign


12,862



(900
)


11,962$
16,344


$
(5,597
)

$
10,747Year ended August 31, 2006 (Restated):U.S. federal

$



$
8,110


$
8,110State and local


6,249



1,020



7,269Foreign


2,221







2,221$
8,470


$
9,130


$
17,600Year ended August 31, 2005 (Restated):U.S. federal

$



$
14,266


$
14,266State and local


978



1,656



2,634Foreign


536







536$
1,514


$
15,922


$
17,436  108




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2007


2006


2005(Restated)


(Restated)U.S. Federal income tax rate


35
%


35
%


35
%State taxes, net of federal income tax benefit


5



6



5Foreign tax differential


(13
)


2



(23
)Work Opportunity Tax Credit


(22
)


(6
)


Foreign tax credits


(6
)






(7
)Valuation allowance






(15
)


43Minority interest


(19
)


(6
)


(7
)Compensation and stock options


11



5



2Tax matters under appeal


30







Nondeductible meals and entertainment


8



1



1Other, net


3







(3
)32
%


22
%


46
%    109




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At August 31,2007


2006(Restated)Deferred tax assets:Receivables

$
5,442


$
5,734Net operating loss and tax credit carryforwards


99,286



108,876Other expenses not currently deductible


26,510



9,798Investments in affiliates, primarily due to impairment


18,582



Foreign currency on Japanese Yen-denominated bonds


12,597



Compensation related expenses


51,783



38,993Total gross deferred tax assets


214,200



163,401Less valuation allowance


(24,065
)


(22,978
)Net deferred tax assets


190,135



140,423Deferred tax liabilities:Goodwill


(38,926
)


(33,370
)Property, plant and equipment


(23,662
)


(25,669
)Employee benefits and other expenses


(26,246
)


(14,963
)Total gross deferred tax liabilities


(88,834
)


(74,002
)Net deferred tax assets

$
101,301


$
66,421      110




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 10 
    Common
    Stock                 111




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11 
    Share-Based
    Compensation  Stock
    Compensation Plans
    AuthorizedPlan

Shares


Types of Equity Instrument Authorized1993 Employee Stock Option Plan (1993 Plan)


3,844,000


Qualified and non-qualified stock options and restricted stock
    awards1996 Non-Employee Director Stock Option Plan (1996 Plan)


300,000


Non-qualified stock optionsStone & Webster Acquisition Stock Option Plan
    (Stone & Webster Plan)


1,070,000


Non-qualified stock options2001 Employee Incentive Compensation Plan (2001 Plan)


9,500,000


Qualified and non-qualified stock options, stock appreciation
    rights, performance shares and restricted stock awards2005 Non-Employee Director Stock Incentive Plan (Directors
    Plan)


300,000


Non-qualified stock options and phantom stock awards       Stock
    Options
    For the Year Ended August 31,2007


2006


2005(Restated)Expected volatility


42
%


47
%


65
%Risk-free interest rate


4.7
%


4.5
%


3.6
%Expected term of options (in years)


6.2



6.6



5.0Grant-date fair value

$
13.33


$
14.48


$
8.01    112




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted


Weighted-AverageAverage


RemainingShares


Exercise Price


Contract TermOutstanding at August 31, 2005, (Restated)


5,817,006


$
16.08Granted


806,111



21.46Exercised


(1,168,023
)


15.99Forfeited


(203,723
)


16.73Outstanding at August 31, 2006, (Restated)


5,251,371


$
16.92



6.2Granted


983,806



27.73Exercised


(569,152
)


15.49Forfeited


(374,216
)


20.19Outstanding at August 31, 2007


5,291,809


$
18.86



5.8Exercisable at August 31, 2007


3,511,786


$
17.12



4.5     For the Year Ended August 31,2007


2006


2005Stock Option Compensation Expense

$
8.5


$
9.5


$
         Grant-DateShares


Fair ValueUnvested stock options at September 1, 2005


2,420,483


$
8.13Granted


806,111



14.48Vested


(940,725
)


8.99Forfeited


(132,092
)


8.21Unvested stock options at August 31, 2006


2,153,777



10.13Granted


983,806



13.33Vested


(1,024,447
)


9.31Forfeited


(333,113
)


11.08Unvested stock options at August 31, 2007


1,780,023


$
12.14  113




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Restricted
    Stock
      For the Year Ended August 31,2007


2006


2005Restricted Stock Compensation Expense

$
10.9


$
7.8


$
4.0     August 31,2007


2006(Restated)Restricted stock:Granted, during and as of the period ended


458,331



463,371Outstanding, as of


995,260



1,240,268     Note 12 
    Operating
    Leases     114




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the year ending August 31 (in thousands):2008

$
77,9412009


71,1422010


61,8792011


47,0352012


26,999Thereafter


61,784Total future minimum lease payments

$
346,780     10-year
      Note 13 
    Contingencies
    and Commitments  Tax
    Matters
     115




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Military
    Housing Privatization Entities
    Liabilities
    Related to Contracts
    
    warranty, requiring achievement of acceptance and performance
    testing levels;
    liquidated damages, if the project does not meet predetermined
    completion dates; and
    penalties or liquidated damages for failure to meet other cost
    or project performance measures.  and/or
  Other
    Guarantees
      SEC
    Inquiry
   116




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 8-K
    Securities
    Litigation
  Thompson v. The Shaw Group
    Inc , et al. No. 04-1685. Thompson Rule 10b-5 Thompson Thompson
  Nelson v.
    Bernhard, Jr., et al Reusche v.
    Barfield, Jr., et al.
 117




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reusche
  City of Brockton Retirement System v. The Shaw
    Group Inc., et al. No. 06-CV-8245. Rule 10b-5
    Other
    Litigation
    Stone & Webster, Inc.
    (S&W) v. Mitsubishi Heavy Industries, Ltd. and
    Mitsubishi Power Systems, Inc. (collectively, Mitsubishi).
 118




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Environmental
    Liabilities
      Employment
    Contracts
     119




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 14 
    Business
    Segments             120




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      InvestmentFossil &









In

CorporateNuclear

E&I

E&C

Maintenance

F&M

Westinghouse

and other

TotalFiscal Year 2007Revenues from external customers

$
1,635.6


$
1,469.3


$
1,063.9


$
1,081.5


$
472.8


$



$
0.6


$
5,723.7Intersegment revenues


0.1



4.2



0.4



4.1















8.8Interest income


3.0



1.2



4.5



1.9



0.9







2.3



13.8Interest expense


1.5



0.9



0.5







0.3



30.6



9.6



43.4Depreciation and amortization


3.6



11.6



5.7



3.5



5.9







11.0



41.3Income (loss) before income taxes


42.3



18.3



35.2



9.3



91.2



(66.7
)


(96.4
)


33.2Earnings (losses) from unconsolidated entities






(27.4
)


1.4











2.2



0.1



(23.7
)Goodwill


148.6



194.2



111.9



42.0



17.3











514.0Total assets


700.2



803.1



422.1



123.9



492.8



1,116.5



972.7



4,631.3Investment in and advances to equity method investees






32.7



4.7



0.5



3.1



1,094.5



0.3



1,135.8Purchases of property and equipment


6.9



23.2



2.4



2.8



21.5







8.4



65.2Increases (decreases) in other assets, long-term, net


(0.3
)


(5.3
)


(6.0
)


(0.1
)


(0.1
)


9.5



13.9



11.6   InvestmentFossil &









in

CorporateNuclear

E&I

E&C

Maintenance

F&M

Westinghouse

and other

TotalFiscal Year 2006 (Restated)Revenues from external customers

$
849.0


$
2,115.3


$
587.6


$
904.0


$
319.7


$



$



$
4,775.6Intersegment revenues


0.4



2.5



0.5



4.2



0.1











7.7Interest income


2.1



1.1



2.5







0.1







0.1



5.9Interest expense


0.8



0.2



0.3







0.8







17.1



19.2Depreciation and amortization


3.2



9.6



3.8



3.0



5.1







10.6



35.3Income (loss) before income taxes


(18.1
)


124.7



7.0



18.1



48.2







(99.5
)


80.4Earnings (losses) from unconsolidated entities






2.7



1.1







(1.7
)










2.1Goodwill


150.7



186.9



111.5



42.0



15.5











506.6Total assets


430.6



892.1



285.9



111.1



365.1







1,090.9



3,175.7Investment in and advances to equity method investees






44.7



3.4



2.0



3.1











53.2Purchases of property and equipment


16.2



15.6



2.0



2.8



6.2







6.3



49.1Increases (decreases) in other assets, long-term, net


7.4



0.1



(8.3
)


0.2



0.1







2.9



2.4  121




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  InvestmentFossil &









in

CorporateNuclear

E&I

E&C

Maintenance

F&M

Westinghouse

and other

TotalFiscal Year 2005 (Restated)Revenues from external customers

$
810.7


$
1,121.0


$
372.1


$
736.8


$
227.1


$



$



$
3,267.7Intersegment revenues


1.1



1.4



0.2



3.6



1.3











7.6Interest income


2.2



0.2



2.5







0.3







0.4



5.6Interest expense


1.3



0.4



1.9







0.5







25.0



29.1Depreciation and amortization


2.9



9.0



3.3



1.8



4.7







9.7



31.4Income (loss) before income taxes


56.4



54.9



14.6



17.4



21.8







(127.2
)


37.9Earnings (losses) from unconsolidated entities






4.0



0.1







(0.7
)






0.4



3.8Goodwill


150.7



186.9



111.4



42.4



15.1











506.5Total assets


472.2



402.2



204.3



74.4



241.7







1,330.3



2,725.1Investment in and advances to equity method investees






25.7



5.1



1.2



3.9











35.9Purchases of property and equipment


4.2



16.4



0.8



0.4



4.3







4.1



30.2Increases (decreases) in other assets, long-term, net


(9.1
)


(5.3
)


2.3



0.2



(1.5
)






(7.7
)


(21.1
)       At August 31,2007


2006


2005(Restated)


(Restated)Total segment assets

$
4,631.3


$
3,175.7


$
2,725.1Elimination of intercompany receivables


(305.7
)


(285.5
)


(283.4
)Elimination of investments in subsidiaries


(397.1
)


(320.5
)


(304.5
)Income tax entries not allocated to segments


(53.6
)


(32.3
)


(41.8
)Total consolidated assets

$
3,874.9


$
2,537.4


$
2,095.4  122




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For The Year Ended August 31,2007


2006


2005(Restated)


(Restated)Revenues:United States

$
4,525.1


$
4,197.8


$
2,847.1Asia/Pacific Rim countries


224.3



161.4



234.4Middle East


789.4



293.3



80.9United Kingdom and other European countries


133.8



73.7



59.4South America and Mexico


22.4



24.9



20.3Canada


15.2



17.3



15.5Other


13.5



7.2



10.1$
5,723.7


$
4,775.6


$
3,267.7   At August 31,2007


2006


2005(Restated)


(Restated)Long-Lived Assets:United States

$
1,149.3


$
295.2


$
257.9United Kingdom


292.1



9.9



1.3Other foreign countries


45.3



45.8



50.6$
1,486.7


$
350.9


$
309.8     Major
    Customers
   123




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Percentage ofNumber of



SegmentSegment

Customers

Revenues

RevenuesFossil & Nuclear


3


$
822,963



50
%E&I


1



925,869



63E&C


1



574,863



54Maintenance


3



424,798



39     Export
    Revenues
    Note 15 
    Supplemental
    Disclosure to Earnings (Loss) Per Common Share  For the Year Ended August 31,2007


2006


2005Weighted average shares outstanding (in thousands):Basic


79,857



78,791



68,673Diluted:Stock options






1,168



921LYONs Convertible Debt






10



Restricted stock






320



19879,857



80,289



69,792     For the Year Ended August 31,2007

2006

2005Weighted-average incremental shares:Stock options


5,451



407



2,950Restricted stock


1,101







66LYONs convertible debt










10   Note 16 
    Employee
    Benefit Plans    Defined
    Contribution Plans
   124




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Defined
    Benefit Plans
    plan-by-plan
    BeforeAdjustment

Adjustments

As AdjustedDeferred income taxes (non-current)

$
14,210


$
7,945


$
22,155Total assets


3,866,907



7,945



3,874,852Other liabilities


43,369



19,591



62,960Accumulated other comprehensive income (loss)


(25,020
)


(11,646
)


(36,666
)Total stockholders equity


1,248,167



(11,646
)


1,236,521Total liabilities and stockholders equity


3,866,907



7,945



3,874,852    125




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Funded
    Status
    For the Year Ended August 31,2007


2006


2005Change in Projected Benefit Obligation:Projected benefit obligation at the start of the year

$
157,213


$
144,240


$
116,712Service cost


2,686



2,884



2,664Interest cost


6,358



7,011



6,738Prior service cost










767Participants contributions


943



863



910Actuarial loss (gain)


1,754



(1,210
)


22,301Benefits paid


(7,499
)


(6,253
)


(6,110
)Foreign currency exchange


9,045



9,679



258Projected benefit obligation at the end of the year

$
170,500


$
157,214


$
144,240Change in Fair Value of Plan Assets:Fair value of the plan assets at the start of the year

$
116,311


$
101,335


$
87,273Actual return on plan assets


6,981



7,537



14,755Company contributions


9,740



5,704



3,944Participants contributions


943



863



910Benefits paid


(7,499
)


(6,253
)


(6,110
)Foreign currency exchange


6,655



7,125



563Fair value of the plan assets at the end of the year


133,131



116,311



101,335Funded Status at end of the year

$
(37,369
)

$
(40,903
)

$
(42,905
)Components of Net Periodic Benefit Cost and Other amounts
    recognized in Other Comprehensive IncomeNet Periodic Benefit Cost:Service cost

$
2,976


$
2,884


$
2,664Interest cost


8,231



7,011



6,738Expected return on plan assets


(8,497
)


(6,863
)


(6,422
)Amortization of net loss


2,632



2,403



1,912Other






872



1,065Total net periodic benefit cost

$
5,342


$
6,307


$
5,957  126




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Assumptions
  For the Year Ended August 31,2007


2006


2005Weighted  Average Assumptions Used to Determine
    Benefit Obligations at August 31:Discount rate


5.50-5.75
%


5.00-5.25
%


4.75-5.00
%Rate of compensation increase


4.00-4.50
%


4.00-4.75
%


4.00-4.70
%Weighted  Average Assumptions Used to Determine
    Net Periodic Benefit Cost for Years Ended August 31:Discount rate at end of the year


5.00-5.25
%


4.75-5.10
%


5.00-6.00
%Expected return on plan assets for the year


6.40-7.25
%


6.30-8.00
%


6.30-8.00
%Rate of compensation increase at end of the year


4.00-4.75
%


4.00-4.70
%


4.00-4.90
%         Plan
    Assets, Investment Policies and Strategies and Expected
    Long-Term Rate of Return on Plan Assets
    At August 31,Asset Category

2007


2006Equity securities


61.6
%


64.0
%Debt securities


35.4



31.4Other


3.0



4.6Total


100.0
%


100.0
%      127




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Contributions
    and Benefit Payments
    Fiscal Year

Pension Benefits2008

$
7,0532009


7,2802010


7,5842011


7,8372012


8,1042013  2017


44,340     Supplemental
    Deferred Compensation Plans
        Note 17 
    Related
    Party Transactions   128




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  20-year 20-year
    Note 18 
    Foreign
    Currency Translation and Transactions    Note 19 
    Long-Term
    Construction Accounting for Revenue and Profit/Loss Recognition
    Including Claims, Unapproved Change Orders and
    Incentives   129




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Unapproved
    Change Orders and Claims
    Amounts included in project
    estimates-at-completion
    at August 31, 2006

$
79.1Changes in
    estimates-at-completion


(26.6
)Approved by customer


(58.6
)Increase in unapproved change orders and claims


21.2Amounts included in project
    estimates-at-completion
    at August 31, 2007

$
15.1Amounts accrued in revenues (or reductions to contract costs) at
    August 31, 2007

$
11.3   estimates-at-completion
    Covert,
    Harquahala, Wolf Hollow and Marcus Hook Claims
    Performance
    Guarantees
  paid-up
 130




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Project
    Incentives
  SOP 81-1
  estimates-at-completion
    Contract
    Losses
    Note 20 
    Assets
    Held for Sale, Discontinued Operations and Costs Associated with
    Exit and Disposal Activities  Assets
    Held For Sale
    Discontinued
    Operations
    Exit
    and Disposal Activities
   131




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 21 
    Quarterly
    Financial Data (Unaudited)    First


Second


Third


Fourth(In thousands, except per share data)

Quarter


Quarter


Quarter


Quarter(Restated)


(Restated)


(Restated)Year ended August 31, 2007Revenues

$
1,276,131


$
1,208,190


$
1,602,741


$
1,636,650Gross profit

$
90,084


$
28,577


$
134,289


$
122,467Operating income

$
25,714


$
(42,879
)

$
66,102


$
51,990Interest expense

$
(8,152
)

$
(13,077
)

$
(11,622
)

$
(10,537
)Foreign currency translation/transaction gains/losses

$
(34,094
)

$
32,379


$
15,156


$
(51,920
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
(14,260
)

$
(21,953
)

$
73,398


$
(4,019
)Income (loss) from continuing operations

$
(12,289
)

$
(61,494
)

$
54,138


$
645Net income (loss)

$
(12,289
)

$
(61,494
)

$
54,138


$
645Basic net income (loss) per share

$
(0.15
)

$
(0.77
)

$
0.68


$
0.01Diluted net income (loss) per share

$
(0.15
)

$
(0.77
)

$
0.66


$
0.01   First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(Restated)


(Restated)


(Restated)


(Restated)Year ended August 31, 2006Revenues

$
1,138,491


$
1,242,069


$
1,226,333


$
1,168,756Gross profit

$
106,835


$
96,622


$
31,976


$
85,587Operating income

$
52,139


$
41,514


$
(20,760
)

$
22,552Interest expense

$
(3,511
)

$
(4,992
)

$
(4,876
)

$
(5,798
)Foreign currency translation/transaction gains/losses

$
1,041


$
(129
)

$
(1,735
)

$
(42
)   132




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  First


Second


Third


Fourth(In thousands, except per share data)

Quarter


Quarter


Quarter


Quarter(Restated)


(Restated)


(Restated)


(Restated)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
50,259


$
38,813


$
(25,754
)

$
17,091Income (loss) from continuing operations

$
32,720


$
21,483


$
(17,323
)

$
13,346Net income (loss)

$
32,720


$
21,483


$
(17,323
)

$
13,346Basic net income (loss) per share

$
0.42


$
0.27


$
(0.22
)

$
0.17Diluted net income (loss) per share

$
0.41


$
0.27


$
(0.22
)

$
0.17     Restatement
    of Quarterly Consolidated Statements
      ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedNovember 30, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,270,202


$
5,893


$
1,276,095


$
36


$
1,276,131Cost of revenues


1,183,800



655



1,184,455



1,592



1,186,047Gross profit

$
86,402


$
5,238


$
91,640


$
(1,556
)

$
90,084Operating income

$
23,210


$
4,117


$
27,327


$
(1,613
)

$
25,714Interest expense

$
(8,116
)

$
(36
)

$
(8,152
)

$



$
(8,152
)Foreign currency translation/transaction gain/(loss)

$
(34,094
)

$



$
(34,094
)

$



$
(34,094
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
(16,881
)

$
4,234


$
(12,647
)

$
(1,613
)

$
(14,260
)Provision (benefit) for income taxes

$
(7,818
)

$
2,102


$
(5,716
)

$
(467
)

$
(6,183
)Income (loss) from continuing operations

$
(12,846
)

$
1,704


$
(11,142
)

$
(1,147
)

$
(12,289
)Income (loss) from discontinued operations


(1,147
)






(1,147
)


1,147



Net income (loss)

$
(13,993
)

$
1,704


$
(12,289
)

$



$
(12,289
)Basic earnings (loss) per share:Income (loss) from continuing operations

$
(0.16
)

$
0.03


$
(0.13
)

$
(0.02
)

$
(0.15
) 133




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedNovember 30, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedIncome (loss) from discontinued operations


(0.02
)






(0.02
)


0.02



Net Income (loss)

$
(0.18
)

$
0.03


$
(0.15
)

$



$
(0.15
)Diluted net income (loss) per share:Income (loss) from continuing operations

$
(0.16
)

$
0.03


$
(0.13
)

$
(0.02
)

$
(0.15
)Income (loss) from discontinued operations


(0.02
)






(0.02
)


0.02



Net Income (loss)

$
(0.18
)

$
0.03


$
(0.15
)

$



$
(0.15
)   ReclassificationPreviously


Restatement





of DiscontinuedAs of November 30, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,538,142


$
7,877


$
1,546,019


$
(2,896
)

$
1,543,123Total assets

$
3,495,762


$
13,988


$
3,509,750


$



$
3,509,750Current liabilities

$
1,075,835


$
14,101


$
1,089,936


$



$
1,089,936Total liabilities

$
2,264,082


$
15,106


$
2,279,188


$



$
2,279,188Shareholders equity

$
1,231,680


$
(1,118
)

$
1,230,562


$



$
1,230,562     
    Adjustments resulting in a net increase in pre-tax income
    related to deferred costs deemed unrecoverable not properly
    reserved ($2.2 million), changes in estimated contract
    profit on certain projects not recorded when identified
    ($2.6 million) and project close-out costs not recorded
    timely ($0.7 million); offset by improper recognition of
    liquidated damages on a project ($1.1 million), under
    accruals for holiday pay ($0.5 million), and under accruals
    for legal expenses ($0.5 million);
    Adjustments to increase minority interest expense related to
    changes in estimated contract profit on a project not recorded
    when identified ($0.7 million);
    Adjustment to record the income tax effect of restatements
    ($1.5 million) and correct an error related to the income
    tax benefit related to certain stock-based compensation
    ($0.6 million); and
    Other errors resulting in other adjustments that are less
    significant and affect various other accounts.  134




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedFebruary 28, 2007 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,208,709


$
384


$
1,209,093


$
(903
)

$
1,208,190Cost of revenues


1,177,781



146



1,177,927



1,686



1,179,613Gross profit

$
30,928


$
238


$
31,166


$
(2,589
)

$
28,577Operating income/(loss)

$
(41,498
)

$
1,255


$
(40,243
)

$
(2,636
)

$
(42,879
)Interest expense

$
(13,113
)

$
36


$
(13,077
)

$



$
(13,077
)Foreign currency translation/transaction gain/(loss)

$
32,379


$



$
32,379


$



$
32,379Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
(20,864
)

$
1,547


$
(19,317
)

$
(2,636
)

$
(21,953
)Provision (benefit) for income taxes

$
10,124


$
276


$
10,400


$
(748
)

$
9,652Income (loss) from continuing operations

$
(60,693
)

$
1,087


$
(59,606
)

$
(1,888
)

$
(61,494
)Income (loss) from discontinued operations


(1,888
)






(1,888
)


1,888



Net income (loss)

$
(62,581
)

$
1,087


$
(61,494
)

$



$
(61,494
)Basic earnings (loss) per share:Income (loss) from continuing operations

$
(0.76
)

$
0.01


$
(0.75
)

$
(0.02
)

$
(0.77
)Income (loss) from discontinued operations


(0.02
)






(0.02
)


0.02



Net Income (loss)

$
(0.78
)

$
0.01


$
(0.77
)

$



$
(0.77
)Diluted net income (loss) per share:Income (loss) from continuing operations

$
(0.76
)

$
0.01


$
(0.75
)

$
(0.02
)

$
(0.77
)Income (loss) from discontinued operations


(0.02
)






(0.02
)


0.02



Net Income (loss)

$
(0.78
)

$
0.01


$
(0.77
)

$



$
(0.77
)   ReclassificationPreviously


Restatement





of DiscontinuedAs of February 28, 2007 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,534,559


$
6,909


$
1,541,468


$



$
1,541,468Total assets

$
3,508,298


$
7,967


$
3,516,265


$



$
3,516,265Current liabilities

$
1,173,578


$
8,261


$
1,181,839


$



$
1,181,839Total liabilities

$
2,327,894


$
9,296


$
2,337,190


$



$
2,337,190Shareholders equity

$
1,180,404


$
(1,329
)

$
1,179,075


$



$
1,179,075  135




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Adjustments resulting in net increase in pre-tax income related
    to over accrued payroll and holiday pay ($1.3 million),
    project close-out costs not recorded timely ($0.7 million),
    an employment agreement improperly recorded ($0.6 million),
    interest income on retention receivable not recorded
    ($0.3 million); offset by changes in estimated contract
    profit on certain projects recorded in the period after being
    identified in the prior period ($2.6 million);
    Adjustments to decrease minority interest expense related to
    changes in estimated contract profit on a project recorded in
    the period after being identified in the prior period
    ($0.7 million);
    Adjustments to Shaws share of unconsolidated
    entities capitalization of interest expense on
    construction in progress not recorded ($0.8 million);
    Adjustment to record the income tax effect of restatements
    ($0.3 million); and
    Other errors resulting in other adjustments that are less
    significant and affect various other accounts.  136




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedMay 31, 2007 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,601,436


$
1,305


$
1,602,741


$



$
1,602,741Cost of revenues


1,465,940



2,392



1,468,332



120



1,468,452Gross profit

$
135,496


$
(1,087
)

$
134,409


$
(120
)

$
134,289Operating income/(loss)

$
67,041


$
(770
)

$
66,271


$
(169
)

$
66,102Interest expense

$
(11,622
)

$



$
(11,622
)

$



$
(11,622
)Foreign currency translation/transaction gain/(loss)

$
15,156


$



$
15,156


$



$
15,156Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
73,965


$
(398
)

$
73,567


$
(169
)

$
73,398Provision (benefit) for income taxes

$
15,707


$
84


$
15,791


$
(48
)

$
15,743Income (loss) from continuing operations

$
54,739


$
(480
)

$
54,259


$
(121
)

$
54,138Income (loss) from discontinued operations


(121
)






(121
)


121



Net income (loss)

$
54,618


$
(480
)

$
54,138


$



$
54,138Basic earnings (loss) per share:Income (loss) from continuing operations

$
0.68


$



$
0.68


$



$
0.68Income (loss) from discontinued operations


















Net Income (loss)

$
0.68


$



$
0.68


$



$
0.68Diluted net income (loss) per share:Income (loss) from continuing operations

$
0.67


$
(0.01
)

$
0.66


$



$
0.66Income (loss) from discontinued operations


















Net Income (loss)

$
0.67


$
(0.01
)

$
0.66


$



$
0.66   ReclassificationPreviously


Restatement





of DiscontinuedAs of May 31, 2007 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,625,204


$
7,752


$
1,632,956


$



$
1,632,956Total assets

$
3,610,526


$
7,290


$
3,617,816


$



$
3,617,816Current liabilities

$
1,245,150


$
8,624


$
1,253,774


$



$
1,253,774Total liabilities

$
2,368,042


$
9,101


$
2,377,143


$



$
2,377,143Shareholders equity

$
1,242,484


$
(1,811
)

$
1,240,673


$



$
1,240,673  137




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Adjustments resulting in a net reduction in pre-tax income
    related to contract close-out costs recorded in the period
    related to prior periods ($1.2 million), offset by interest
    income on retention receivable not recorded ($0.4 million),
    project incentives incorrectly recorded ($0.3 million) and
    settlement of a contract dispute not recorded when identified
    ($0.3 million); and
    Other errors resulting in other adjustments that are less
    significant and affect various other accounts.  ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedNovember 30, 2005 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,135,461


$
290


$
1,135,751


$
2,740


$
1,138,491Cost of revenues


1,027,443



1,265



1,028,708



2,948



1,031,656Gross profit

$
108,018


$
(975
)

$
107,043


$
(208
)

$
106,835Operating income

$
53,697


$
(1,216
)

$
52,481


$
(342
)

$
52,139Interest expense

$
(3,393
)

$
(118
)

$
(3,511
)

$



$
(3,511
)Foreign currency translation/transaction gain/(loss)

$
946


$
95


$
1,041


$



$
1,041Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
51,395


$
(374
)

$
51,021


$
(762
)

$
50,259Provision (benefit) for income taxes

$
17,904


$
(148
)

$
17,756


$
(276
)

$
17,480Income (loss) from continuing operations

$
33,152


$
7


$
33,159


$
(439
)

$
32,720Income (loss) from discontinued operations


(439
)






(439
)


439



Net income (loss)

$
32,713


$
7


$
32,720


$



$
32,720Basic earnings (loss) per share:Income (loss) from continuing operations

$
0.42


$



$
0.42


$
(0.01
)

$
0.42Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
0.41


$



$
0.42


$



$
0.42Diluted net income (loss) per share:Income (loss) from continuing operations

$
0.42


$



$
0.42


$
(0.01
)

$
0.41Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
0.41


$



$
0.41


$



$
0.41   138




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedAs of November 30, 2005 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,494,762


$
12,068


$
1,506,830


$
(7,375
)

$
1,499,455Total assets

$
2,305,195


$
12,056


$
2,317,251


$



$
2,317,251Current liabilities

$
951,591


$
9,849


$
961,440


$



$
961,440Total liabilities

$
1,120,023


$
12,571


$
1,132,594


$



$
1,132,594Shareholders equity

$
1,185,172


$
(515
)

$
1,184,657


$



$
1,184,657   ReclassificationFor the Fiscal Quarter Ended

Previously


Restatement





of DiscontinuedFebruary 28, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,238,832


$
(856
)

$
1,237,976


$
4,093


$
1,242,069Cost of revenues


1,140,853



396



1,141,249



4,198



1,145,447Gross profit

$
97,979


$
(1,252
)

$
96,727


$
(105
)

$
96,622Operating income/(loss)

$
42,496


$
(775
)

$
41,721


$
(207
)

$
41,514Interest expense

$
(4,971
)

$
(21
)

$
(4,992
)

$



$
(4,992
)Foreign currency translation/transaction gain/(loss)

$
(129
)

$



$
(129
)

$



$
(129
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
39,850


$
(795
)

$
39,055


$
(242
)

$
38,813Provision (benefit) for income taxes

$
13,485


$
(314
)

$
13,171


$
(49
)

$
13,122Income (loss) from continuing operations

$
21,894


$
(355
)

$
21,539


$
(56
)

$
21,483Income (loss) from discontinued operations


(56
)






(56
)


56



Net income (loss)

$
21,838


$
(355
)

$
21,483


$



$
21,483Basic earnings (loss) per share:Income (loss) from continuing operations

$
0.28


$



$
0.27


$



$
0.27Income (loss) from discontinued operations


















Net Income (loss)

$
0.28


$



$
0.27


$



$
0.27Diluted net income (loss) per share:Income (loss) from continuing operations

$
0.27


$



$
0.27


$



$
0.27Income (loss) from discontinued operations


















Net Income (loss)

$
0.27


$



$
0.27


$



$
0.27   139




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedAs of February 28, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,703,339


$
9,702


$
1,713,041


$
(7,456
)

$
1,705,585Total assets

$
2,516,955


$
10,431


$
2,527,386


$



$
2,527,386Current liabilities

$
1,029,667


$
8,371


$
1,038,038


$



$
1,038,038Total liabilities

$
1,292,100


$
11,308


$
1,303,408


$



$
1,303,408Shareholders equity

$
1,224,855


$
(877
)

$
1,223,978


$



$
1,223,978   ReclassificationPreviously


Restatement





of DiscontinuedFor the Fiscal Quarter Ended May 31, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,226,784


$
(74
)

$
1,226,710


$
(377
)

$
1,226,333Cost of revenues


1,192,869



889



1,193,758



599



1,194,357Gross profit

$
33,915


$
(963
)

$
32,952


$
(976
)

$
31,976Operating income/(loss)

$
(18,333
)

$
(1,463
)

$
(19,796
)

$
(964
)

$
(20,760
)Interest expense

$
(4,897
)

$
21


$
(4,876
)

$



$
(4,876
)Foreign currency translation/transaction gain/(loss)

$
(1,735
)

$



$
(1,735
)

$



$
(1,735
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
(23,582
)

$
(1,244
)

$
(24,826
)

$
(928
)

$
(25,754
)Provision (benefit) for income taxes

$
(12,238
)

$
(492
)

$
(12,730
)

$
(233
)

$
(12,963
)Income (loss) from continuing operations

$
(16,014
)

$
(650
)

$
(16,664
)

$
(659
)

$
(17,323
)Income (loss) from discontinued operations


(659
)






(659
)


659



Net income (loss)

$
(16,673
)

$
(650
)

$
(17,323
)

$



$
(17,323
)Basic earnings (loss) per share:Income (loss) from continuing operations

$
(0.20
)

$
(0.01
)

$
(0.21
)

$
(0.01
)

$
(0.22
)Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
(0.21
)

$
(0.01
)

$
(0.22
)

$



$
(0.22
)Diluted net income (loss) per share:Income (loss) from continuing operations

$
(0.20
)

$
(0.01
)

$
(0.21
)

$
(0.01
)

$
(0.22
)Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
(0.21
)

$
(0.01
)

$
(0.22
)

$



$
(0.22
)   140




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedAs of May 31, 2006 (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,692,853


$
13,847


$
1,706,700


$
(1,846
)

$
1,704,854Total assets

$
2,535,928


$
14,140


$
2,550,068


$



$
2,550,068Current liabilities

$
1,013,149


$
13,005


$
1,026,154


$



$
1,026,154Total liabilities

$
1,319,162


$
15,665


$
1,334,827


$



$
1,334,827Shareholders equity

$
1,216,766


$
(1,525
)

$
1,215,241


$



$
1,215,241   ReclassificationPreviously


Restatement





of DiscontinuedFor the Fiscal Quarter Ended August 31, 2006
    (Unaudited)

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
1,174,538


$
(6,115
)

$
1,168,423


$
333


$
1,168,756Cost of revenues


1,084,978



(4,329
)


1,080,649



2,520



1,083,169Gross profit

$
89,560


$
(1,786
)

$
87,774


$
(2,187
)

$
85,587Operating income/(loss)

$
25,368


$
(561
)

$
24,807


$
(2,255
)

$
22,552Interest expense

$
(5,798
)

$



$
(5,798
)

$



$
(5,798
)Foreign currency translation/transaction gain/(loss)

$
(43
)

$
1


$
(42
)

$



$
(42
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and loss from discontinued
    operations

$
20,042


$
(696
)

$
19,346


$
(2,255
)

$
17,091Provision (benefit) for income taxes

$
1,389


$
(905
)

$
484


$
(523
)

$
(39
)Income (loss) from continuing operations

$
13,966


$
374


$
14,340


$
(994
)

$
13,346Income (loss) from discontinued operations


(994
)






(994
)


994



Net income (loss)

$
12,972


$
374


$
13,346


$



$
13,346Basic earnings (loss) per share:Income (loss) from continuing operations

$
0.18


$



$
0.18


$
(0.01
)

$
0.17Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
0.17


$



$
0.17


$



$
0.17Diluted net income (loss) per share:Income (loss) from continuing operations

$
0.17


$
0.01


$
0.18


$
(0.01
)

$
0.17Income (loss) from discontinued operations


(0.01
)






(0.01
)


0.01



Net Income (loss)

$
0.16


$
0.01


$
0.17


$



$
0.17  141




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedAs of August 31, 2006

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets

$
1,678,660


$
4,691


$
1,683,351


$
(3,487
)

$
1,679,864Total assets

$
2,529,134


$
8,220


$
2,537,354


$



$
2,537,354Current liabilities

$
1,040,659


$
11,081


$
1,051,740


$



$
1,051,740Total liabilities

$
1,285,927


$
13,097


$
1,299,024


$



$
1,299,024Shareholders equity

$
1,243,207


$
(4,877
)

$
1,238,330


$



$
1,238,330   Note 22 
    New
    Accounting Pronouncements    No. 06-6, (EITF 06-6). No. 05-7, EITF 06-6
  No. 06-1, (EITF 06-1). EITF 06-1 No. 01-9, EITF 06-1
   142




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          No. 06-3, (EITF 06-3). EITF 06-3 EITF 06-3 EITF 06-3
   143




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 23 
    Prior
    Year Restatement of Consolidated Financial Statements    
    Errors in the accounting for estimates of revenues and cost of
    revenues on contracts, including recognition of liquidated
    damages not recorded properly on a project, and improper
    recognition of allowances for uncollectible amounts resulting in
    changes to previously reported revenues and cost of revenues;
    Deferred costs deemed unrecoverable and not properly reserved
    resulting in changes to previously reported cost of revenues;
    Compensation related matters accounted for incorrectly,
    including vacation and benefit accruals, employment contracts,
    and stock-based compensation resulting in changes to costs of
    revenues, general and administrative expenses, other income and
    expense, and provision for income taxes;
    Lease related items, including rent escalation provisions not
    properly accounted for and incorrect amortization of leasehold
    improvements resulting in changes to costs of revenues and
    general and administrative expenses; and
    Other errors resulting in other adjustments that are less
    significant and affect various other accounts.  144




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Reclassification
    of Discontinued Operations
      ReclassificationPreviously


Restatement





of DiscontinuedFor the Year Ended August 31, 2006

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
4,775,615


$
(6,755
)(a)

$
4,768,860


$
6,789


$
4,775,649Cost of revenues


4,446,143



(1,776
)(b)


4,444,367



10,262



4,454,629Gross profit


329,472



(4,979
)


324,493



(3,473
)


321,020General and administrative expenses


226,244



(962
)(c)


225,282



293



225,575Operating income


103,228



(4,017
)


99,211



(3,766
)


95,445Interest expense


(19,059
)


(118
)


(19,177
)






(19,177
)Interest income


5,877



62



5,939







5,939Loss on retirement of debt


















Foreign currency transaction gains (losses), net


(961
)


96



(865
)






(865
)Other income (expense), net


(1,380
)


865
(d)


(515
)


(418
)


(933
)(15,523
)


905



(14,618
)


(418
)


(15,036
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and income (loss) from
    discontinued operations


87,705



(3,112
)


84,593



(4,184
)


80,409Provision (benefit) for income taxes


20,540



(1,859
)(e)


18,681



(1,081
)


17,600Income (loss) before minority interest, earnings (losses) from
    unconsolidated entities and income (loss) from discontinued
    operations


67,165



(1,253
)


65,912



(3,103
)


62,809Minority interest


(15,680
)






(15,680
)


955



(14,725
) 145




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedFor the Year Ended August 31, 2006

Reported


Adjustments


As Restated


Operations


As ReportedEarnings (losses) from unconsolidated entities, net of taxes


1,513



629
(f)


2,142







2,142Income (loss) from continuing operations


52,998



(624
)


52,374



(2,148
)


50,226Income (loss) from discontinued operations, net of taxes:Income (loss) from discontinued operations


(1,144
)






(1,144
)


1,144



Gain (impairment) of discontinued operations


(1,004
)






(1,004
)


1,004



Income (loss) from discontinued operations, net of taxes


(2,148
)






(2,148
)


2,148



Net income (loss)

$
50,850


$
(624
)

$
50,226


$



$
50,226Net income (loss) per common share:Basic:Income (loss) from continuing operations

$
0.68


$
(0.01
)

$
0.67


$
(0.03
)

$
0.64Income (loss) from discontinued operations, net of taxes


(0.03
)






(0.03
)


0.03



Net income (loss)

$
0.65


$
(0.01
)

$
0.64


$



$
0.64Diluted:Income (loss) from continuing operations

$
0.66


$



$
0.66


$
(0.03
)

$
0.63Income (loss) from discontinued operations, net of taxes


(0.03
)






(0.03
)


0.03



Net income (loss)

$
0.63


$



$
0.63


$



$
0.63     (a)
    
    Adjustments primarily related to the overstatement of cost
    resulting in overstatement of revenues under the
    percentage-of-completion method of accounting
    ($3.7 million); improper recognition of allowance for
    uncollectible amounts ($0.8 million); and project
    incentives not recorded correctly ($1.0 million).(b)
    
    Adjustments primarily related to costs recorded in excess of
    actual costs incurred ($3.3 million), partially offset by
    adjustments to deferred costs deemed unrecoverable but not
    reserved ($1.3 million).(c)
    
    Adjustments primarily related to under accrued vacation pay
    ($0.3 million), under accrual of lease expense
    ($0.1 million), incorrect amortization of leasehold
    improvements ($0.2 million), and under accrual of
    workers compensation self-insurance reserves
    ($0.3 million).(d)
    
    Adjustment for a cash receipt received in error and improperly
    recognized in miscellaneous income ($0.9 million).(e)
    
    Adjustment to record the income tax effect of restatement
    entries ($1.2 million) and correct an error related to the
    income tax benefit related to certain stock-based compensation
    ($0.6 million).(f)
    
    Adjustment primarily related to Shaws share of
    unconsolidated entities improper capitalization of
    interest expense on construction in progress ($0.5 million).  146




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedFor the Year Ended August 31, 2005

Reported


Adjustments


As Restated


Operations


As ReportedRevenues

$
3,262,328


$
1,786
(a)

$
3,264,114


$
3,588


$
3,267,702Cost of revenues


2,969,658



1,399
(b)


2,971,057



3,842



2,974,899Gross profit


292,670



387



293,057



(254
)


292,803General and administrative expenses


190,252



14



190,266



96



190,362Operating income


102,418



373



102,791



(350
)


102,441Interest expense


(29,225
)


118



(29,107
)






(29,107
)Interest income


5,571







5,571







5,571Loss on retirement of debt


(47,772
)






(47,772
)






(47,772
)Foreign currency transaction gains (losses), net


919



(96
)


823







823Other income (expense), net


6,870



(891
)(c)


5,979







5,979(63,637
)


(869
)


(64,506
)






(64,506
)Income (loss) before income taxes, minority interest, earnings
    (losses) from unconsolidated entities and income (loss) from
    discontinued operations


38,781



(496
)


38,285



(350
)


37,935Provision (benefit) for income taxes


17,784



(210
)


17,574



(138
)


17,436Income (loss) before minority interest, earnings (losses) from
    unconsolidated entities and income (loss) from discontinued
    operations


20,997



(286
)


20,711



(212
)


20,499Minority interest


(7,243
)


(1
)


(7,244
)


64



(7,180
)Earnings (losses) from unconsolidated entities, net of taxes


3,809



(18
)


3,791







3,791Income (loss) from continuing operations


17,563



(305
)


17,258



(148
)


17,110Income (loss) from discontinued operations, net of taxes:Income (loss) from discontinued operations


(1,943
)






(1,943
)


148



(1,795
)Gain (impairment) of discontinued operations


356







356







356Income (loss) from discontinued operations, net of taxes


(1,587
)






(1,587
)


148



(1,439
)Net income (loss)

$
15,976


$
(305
)

$
15,671


$



$
15,671Net income (loss) per common share:Basic:Income (loss) from continuing operations

$
0.25


$



$
0.25


$



$
0.25Income (loss) from discontinued operations, net of taxes


(0.02
)






(0.02
)






(0.02
)Net income (loss)

$
0.23


$



$
0.23


$



$
0.23Diluted:Income (loss) from continuing operations

$
0.25


$



$
0.25


$



$
0.25Income (loss) from discontinued operations, net of taxes


(0.02
)






(0.02
)






(0.02
)Net income (loss)

$
0.23


$



$
0.22
(d)

$



$
0.22
(d)     (a)
    
    Adjustments primarily related to incorrect recognition of
    liquidated damages on a project ($1.2 million) and improper
    recognition of allowance for uncollectible amounts
    ($0.8 million).(b)
    
    Adjustments primarily related to over accrual of payroll
    ($0.6 million) and deferred costs deemed unrecoverable
    recognized in the incorrect period ($0.9 million).(c)
    
    Adjustment for a cash receipt received in error and improperly
    recognized in miscellaneous income ($0.9 million).(d)
    
    Amount does not total due to rounding. 147




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     August 31, 2006As ReportedOriginally On





As Previously10-K Dated





Restated in10/31/06


Adjustments


Form 10-K/A


Adjustments


As RestatedCash flows from operating activities:Net income (loss)

$
50,850


$



$
50,850


$
(624
)

$
50,226Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:






Depreciation and amortization


33,397







33,397



1,875



35,272Impairment of discontinued operations


1,004







1,004



(1,004
)


Provision (benefit) for deferred income taxes


3,610







3,610



(259
)


3,351Stock-based compensation expense


18,277







18,277



(259
)


18,018Accretion of interest on discounted
    long-term
    debt


40







40







40Amortization of deferred debt issue costs


1,084







1,084







1,084Amortization of contract adjustments


(3,575
)






(3,575
)






(3,575
)Provision for uncollectible accounts receivable


10,285







10,285







10,285(Earnings) losses from unconsolidated entities, net of taxes


(1,513
)






(1,513
)


(629
)


(2,142
)Impairment of assets


5,130







5,130







5,130Distributions from unconsolidated entities


1,956







1,956







1,956Foreign currency transaction (gains) losses, net


961







961



(96
)


865Loss on retirement of debt


















Write-off of claims receivable


48,155







48,155







48,155Minority interest


14,901







14,901



(177
)


14,724Payments for financed insurance premiums






(9,765
)


(9,765
)






(9,765
)Pension, net periodic costs














(6,307
)


(6,307
)Return on capital to joint venture partner






(12,210
)


(12,210
)






(12,210
)Other


(779
)






(779
)


1



(778
)Changes in assets and liabilities, net of effects of
    acquisitions and consolidation of variable interest entities:(Increase) decrease in receivables


(318,063
)






(318,063
)


21,828



(296,235
)(Increase) decrease in costs and estimated earnings in excess of
    billings on uncompleted contracts, including claims


(96,425
)






(96,425
)


(7,574
)


(103,999
)(Increase) decrease in inventories


(4,036
)






(4,036
)


(13,099
)


(17,135
)(Increase) decrease in other current assets


(40,172
)






(40,172
)


6,675



(33,497
)(Increase) decrease in prepaid expenses


(2,452
)






(2,452
)


(336
)


(2,788
)(Increase) decrease in other assets


(18,913
)






(18,913
)


(5,718
)


(24,631
)Increase (decrease) in accounts payable


129,064







129,064



(1,859
)


127,205Increase (decrease) in accrued liabilities


46,925



1,584



48,509



5,355



53,864Increase (decrease) in advanced billings and billings in excess
    of costs and estimated earnings on uncompleted contracts


39,742







39,742



182



39,924Increase (decrease) in deferred revenue-prebilled


5,293







5,293



(3,360
)


1,933Increase (decrease) in other long-term liabilities


174







174



6,307



6,481Net cash provided by (used in) operating activities


(75,080
)


(20,391
)


(95,471
)


922



(94,549
)Cash flows from investing activities:Proceeds from sale of businesses, net of cash surrendered


1,242







1,242







1,242Purchases of businesses, net of cash received


(720
)






(720
)






(720
)Purchase of property and equipment


(48,887
)






(48,887
)


(231
)


(49,118
)Investment in and advances to unconsolidated entities and joint
    ventures


(19,244
)






(19,244
)






(19,244
) 148




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  August 31, 2006As ReportedOriginally On





As Previously10-K Dated





Restated in10/31/06


Adjustments


Form 10-K/A


Adjustments


As RestatedDistributions from unconsolidated entities


3,785







3,785







3,785Acquisition costs


(2,188
)






(2,188
)






(2,188
)Deposits in escrowed cash for repurchase of LYONs


















Withdrawal from escrowed cash for repurchase of LYONs


















Cash received from restricted and escrowed cash


193,722







193,722







193,722Cash deposited into restricted and escrowed cash


(65,230
)






(65,230
)






(65,230
)Proceeds from sale of property and equipment


4,791







4,791







4,791Proceeds from sale of assets held for sale


















Proceeds from the sale of investment in an unconsolidated entity


















Maturities of marketable securities, held to maturity


















Net cash provided by (used in) investing activities


67,271







67,271



(231
)


67,040Cash flows from financing activities:Purchase of treasury stock






(1,584
)


(1,584
)






(1,584
)Repayment of debt and capital leases


(4,878
)






(4,878
)






(4,878
)Payments for financed insurance premiums


(9,765
)


9,765



Return of capital to investment partner


(12,210
)


12,210



Proceeds from issuance of debt


5,305







5,305







5,305Deferred credit costs


(2,072
)






(2,072
)






(2,072
)Issuance of common stock


18,664







18,664



11



18,675Tax benefits from stock based compensation


2,433







2,433



1,153



3,586Proceeds from revolving credit agreements


1,361,055







1,361,055







1,361,055Repayments of revolving credit agreements


(1,257,226
)






(1,257,226
)


111



(1,257,115
)Net cash provided by (used in) financing activities


101,306



20,391



121,697



1,275



122,972Cash from variable interest entities


2,290







2,290







2,290Effects of foreign exchange rate changes on cash


2,271







2,271



(115
)


2,156Net increase (decrease) in cash and cash equivalents


98,058







98,058



1,851



99,909Cash and cash equivalents  beginning of year


56,779







56,779



(1,276
)


55,503Cash and cash equivalents  end of year

$
154,837


$



$
154,837


$
575


$
155,412Supplemental disclosures:Cash payment for:Interest (net of capitalized interest)

$
19,404


$



$
19,404


$



$
19,404Income taxes

$
4,035


$



$
4,035


$



$
4,035Noncash investing and financing activities:Issuance of restricted stock

$
15,908


$



$
15,908


$



$
15,908Financed insurance premiums

$
10,068


$



$
10,068


$



$
10,068Property and equipment acquired through issuance of debt

$
2,716


$



$
2,716


$



$
2,716  149




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  August 31, 2005As ReportedOriginally on





As Previously10-K Dated





Restated in Form10/31/06


Adjustments


10-K/A


Adjustments


As RestatedCash flows from operating activities:Net income (loss)

$
15,976


$



$
15,976


$
(305
)

$
15,671Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


31,183







31,183



205



31,388Impairment of discontinued operations


















Provision (benefit) for deferred income taxes


11,573







11,573



(3,389
)


8,184Stock-based compensation expense


4,321







4,321







4,321Accretion of interest on discounted long-term debt


264







264







264Amortization of deferred debt issue costs


3,448







3,448







3,448Amortization of contract adjustments


(11,098
)






(11,098
)






(11,098
)Provision for uncollectible accounts receivable


2,655







2,655



125



2,780(Earnings) losses from unconsolidated entities, net of taxes


(3,809
)






(3,809
)


19



(3,790
)Impairment of assets


















Distributions from unconsolidated entities


















Foreign currency transaction (gains) losses, net


(919
)






(919
)






(919
)Loss on retirement of debt


47,772







47,772







47,772Write-off of claims receivable


















Minority interest


3,915







3,915



3,264



7,179Payments for financed insurance premiums






(10,582
)


(10,582
)






(10,582
)Return on capital to joint venture partner


















Pension, net periodic costs














(5,957
)


(5,957
)Other


(2,555
)






(2,555
)






(2,555
)Changes in assets and liabilities, net of effects of
    acquisitions and consolidation of variable interest entities:(Increase) decrease in receivables


30,067







30,067



244



30,311(Increase) decrease in costs and estimated earnings in excess of
    billings on uncompleted contracts, including claims


(20,523
)






(20,523
)


(10,280
)


(30,803
)(Increase) decrease in inventories


(17,616
)






(17,616
)






(17,616
)(Increase) decrease in other current assets


11,697







11,697



850



12,547(Increase) decrease in prepaid expenses


4,292







4,292



(38
)


4,254(Increase) decrease in other assets


(8,509
)






(8,509
)


(713
)


(9,222
)Increase (decrease) in accounts payable


4,206







4,206



213



4,419Increase (decrease) in accrued liabilities


3,842







3,842



1,235



5,077Increase (decrease) in advanced billings and billings in excess
    of costs and estimated earnings on uncompleted contracts


(82,049
)






(82,049
)


7,445



(74,604
)Increase (decrease) in deferred revenue-prebilled


2,359







2,359







2,359Increase (decrease) in other long-term liabilities


36,736







36,736



6,049



42,785 150




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  August 31, 2005As ReportedOriginally on





As Previously10-K Dated





Restated in Form10/31/06


Adjustments


10-K/A


Adjustments


As RestatedNet cash provided by (used in) operating activities


67,228



(10,582
)


56,646



(1,033
)


55,613Cash flows from investing activities:Proceeds from sale of businesses, net of cash surrendered


14,108







14,108







14,108Purchases of businesses, net of cash received


















Purchase of property and equipment


(30,201
)






(30,201
)






(30,201
)Investment in and advances to unconsolidated entities and joint
    ventures


(13,335
)






(13,335
)






(13,335
)Distributions from unconsolidated entities


14,930







14,930







14,930Acquisition costs


















Deposits in escrowed cash for repurchase of LYONs


















Withdrawal from escrowed cash for repurchase of LYONs


















Cash received from restricted and escrowed cash


212,474







212,474







212,474Cash deposited into restricted and escrowed cash


(327,800
)






(327,800
)






(327,800
)Proceeds from sale of property and equipment


3,362







3,362







3,362Proceeds from sale of assets held for sale


















Proceeds from the sale of investment in an unconsolidated entity


















Maturities of marketable securities, held to maturity


















Net cash provided by (used in) investing activities


(126,462
)






(126,462
)






(126,462
)Cash flows from financing activities:Purchase of treasury stock


















Repayment of debt and capital leases


(279,828
)






(279,828
)






(279,828
)Payments for financed insurance premiums


(10,582
)


10,582



Proceeds from issuance of debt


3,726







3,726







3,726Deferred credit costs


(4,886
)






(4,886
)






(4,886
)Issuance of common stock


263,849







263,849







263,849Tax benefits from stock based compensation


















Proceeds from revolving credit agreements


463,551







463,551







463,551Repayments of revolving credit agreements


(422,317
)






(422,317
)


(111
)


(422,428
)Net cash provided by (used in) financing activities


13,513



10,582



24,095



111



23,984Cash from variable interest entities


1,343







1,343







1,343Effects of foreign exchange rate changes on cash


(1,194
)






(1,194
)


(7
)


(1,201
)Net increase (decrease) in cash and cash equivalents


(45,572
)






(45,572
)


(1,151
)


(46,723
)Cash and cash equivalents  beginning of year


102,351







102,351



(125
)


102,226Cash and cash equivalents  end of year

$
56,779






$
56,779


$
(1,276
)

$
55,503 151




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  August 31, 2005As ReportedOriginally on





As Previously10-K Dated





Restated in Form10/31/06


Adjustments


10-K/A


Adjustments


As RestatedSupplemental disclosures:Cash payments for:Interest (net of capitalized interest)

$
40,206


$



$
40,206


$



$
40,206Income taxes

$
5,133


$



$
5,133


$



$
5,133Noncash investing and financing activities:Issuance of restricted stock

$
9,445


$



$
9,445


$



$
9,445Financed insurance premiums

$
11,034


$



$
11,034


$



$
11,034     ReclassificationPreviously


Restatement





of DiscontinuedAs of August 31, 2006

Reported


Adjustments


As Restated


Operations


As ReportedCurrent assets:Cash and cash equivalents

$
154,837


$
575


$
155,412


$



$
155,412Restricted and escrowed cash


43,409







43,409







43,409Accounts receivable, including retainage, net


740,920



(22,199
)(a)


718,721







718,721Inventories


101,337



12,471
(b)


113,808



628



114,436Costs and estimated earnings in excess of billings on
    uncompleted contracts, including claims


455,819



14,889
(c)


470,708







470,708Deferred income taxes


83,085



2,000



85,085







85,085Prepaid expenses


8,407



374



8,781







8,781Assets held for sale


5,230







5,230



(4,115
)


1,115Other current assets


85,616



(3,419
)


82,197







82,197Total current assets


1,678,660



4,691



1,683,351



(3,487
)


1,679,864Investment in and advances to unconsolidated entities, joint
    ventures and limited partnerships


52,048



1,125



53,173







53,173Property and equipment:Transportation equipment


15,882







15,882







15,882Furniture, fixtures and software


99,945







99,945







99,945Machinery and equipment


138,468







138,468



1,641



140,109Buildings and improvements


63,456







63,456



1,114



64,570Assets acquired under capital leases


8,382







8,382







8,382Land


6,612







6,612



732



7,344Construction in progress


8,906



231



9,137







9,137Total property and equipment


341,651



231



341,882



3,487



345,369Less: accumulated depreciation


(166,220
)


(901
)


(167,121
)






(167,121
) 152




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ReclassificationPreviously


Restatement





of DiscontinuedAs of August 31, 2006

Reported


Adjustments


As Restated


Operations


As ReportedNet property and equipment


175,431



(670
)


174,761



3,487



178,248Goodwill


506,592







506,592







506,592Other assets


116,403



3,074



119,477







119,477$
2,529,134


$
8,220


$
2,537,354


$



$
2,537,354Current liabilities:Accounts payable

$
483,002


$
(1,651
)


481,351


$



$
481,351Accrued liabilities


211,162



12,528
(d)


223,690







223,690Advanced billings and billings in excess of costs and estimated
    earnings on uncompleted contracts


316,674



3,564



320,238







320,238Contract liability adjustments


3,361







3,361







3,361Deferred revenue  prebilled


14,772



(3,360
)


11,412







11,412Current maturities of long-term debt


4,351







4,351







4,351Short-term revolving lines of credit


5,526







5,526







5,526Current portion of obligations under capital leases


1,811







1,811







1,811Total current liabilities


1,040,659



11,081



1,051,740







1,051,740Long-term revolving line of credit


145,517







145,517







145,517Long-term debt, less current maturities


24,584







24,584







24,584Obligations under capital leases, less current portion


3,433







3,433







3,433Deferred income taxes


18,664







18,664







18,664Other liabilities


39,662



2,016



41,678







41,678Minority interest


13,408







13,408







13,408Shareholders equity:










Preferred stock


















Common stock


1,074,106



(1,517
)


1,072,589







1,072,589Retained earnings


295,962



(3,360
)


292,602







292,602Accumulated other comprehensive loss


(25,363
)






(25,363
)






(25,363
)Unearned stock-based compensation


















Treasury stock


(101,498
)






(101,498
)






(101,498
)Total shareholders equity


1,243,207



(4,877
)


1,238,330







1,238,330$
2,529,134


$
8,220


$
2,537,354


$



$
2,537,354     (a)
    
    Adjustments primarily to more properly classify substantially
    completed fabricated piping from unbilled accounts receivable to
    cost and estimated earnings in excess of billings on uncompleted
    contracts ($18.2 million) and billings in excess of costs
    and estimated earnings on uncompleted contracts
    ($4.3 million). 153




---



##### Table of Contents



THE SHAW
    GROUP INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (b)
    
    Adjustments primarily to more properly classify certain
    inventory items previously included in other current assets to
    inventory ($3.0 million) and to more properly reflect
    inventory paid for by customers in inventory ($9.5 million).(c)
    
    Adjustments primarily to more properly classify substantially
    completed fabricated piping from unbilled accounts receivable
    ($18.2 million), more properly classify certain litigation
    accruals to accrued liabilities ($6.0 million), partially
    offset by correction of an over accrual of costs
    ($3.0 million) and to more properly classify certain
    amounts to billings in excess of costs and estimated earnings on
    uncompleted contracts ($3.3 million).(d)
    
    Adjustments primarily to more properly classify certain
    litigation accruals ($6.0 million) and other accruals
    ($1.8 million) from billings in excess of costs and
    estimated earnings on uncompleted contracts and to properly
    record accrued rent expense on lease escalations
    ($1.9 million). 154




---



Rule 3-09 Regulation S-X:
  REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            155




---



##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
  COMBINED BALANCE SHEET
 March 31, 2007 (Amounts in Thousands)
  NotesASSETSCURRENT ASSETS:Cash and cash equivalents


1,2,4


$
150,962Receivables, net


1,2,4,9,13



248,575Related-party receivables


20



348,004Inventories


1,2,10



361,740Costs and estimated earnings in excess of billings on
    uncompleted contracts


1,2



152,325Prepaid and other current assets


2



42,255Deferred income taxes


1,2,8



52,633Total






1,356,494NONCURRENT ASSETS:Property, plant and equipment, net


1,2,5,11,17



453,687Goodwill


1,2,6



2,845,675Other intangible assets, net


1,2,6



2,086,278Other noncurrent assets


2,12



840,451Total






6,226,091TOTAL





$
7,582,585LIABILITIES AND EQUITYCURRENT LIABILITIES:Accounts payable


2


$
170,952Billings in excess of costs and estimated earnings on
    uncompleted contracts


1,2



550,487Reserves for settlement obligations


1,2,16



26,683Amounts billed in excess of revenue


2



67,655Revolving credit facility


2,13



50,000Other current liabilities


2,4,14



311,658Total






1,177,435NONCURRENT LIABILITIES:Reserves for settlement obligations


2,16



47,336Reserves for decommissioning matters


2,5



141,632Benefit obligations


1,2,7



196,525Deferred income taxes


1,2,8



406,841Other noncurrent liabilities


2,14



80,660Total






872,994MINORITY INTEREST


2



4,440STOCKHOLDERS EQUITY


4,15



5,527,716TOTAL





$
7,582,585    156




---



##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
  COMBINED STATEMENT OF OPERATIONS
 For the Period from October 1, 2006 to March 31, 2007
 (Amounts in Thousands)
  NotesNET REVENUES


1,3,4


$
1,124,119COST OF GOODS SOLD


1



823,022GROSS PROFIT






301,097MARKETING, ADMINISTRATIVE, AND GENERAL EXPENSES


1



233,764AMORTIZATION OF INTANGIBLES






39,109INCOME FROM OPERATIONS






28,224INTEREST AND OTHER EXPENSE, NET


1,4,18,20



(5,226
)INCOME BEFORE INCOME TAXES AND MINORITY INTEREST IN INCOME FROM
    CONSOLIDATED SUBSIDIARIES






22,998MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES






566INCOME BEFORE TAXES






22,432INCOME TAX PROVISION


8



9,863NET INCOME





$
12,569    157




---



##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
  COMBINED STATEMENT OF STOCKHOLDERS
    EQUITY
 For the Period from October 1, 2006 to March 31, 2007
 (Amounts in Thousands)
  AccumulatedOtherComprehensiveNotes


Capital Stock


Retained Earnings


(Loss) Income


Total EquityInvested capital


2,15


$
5,400,000


$



$



$
5,400,000Comprehensive income (loss):


1Net income










12,569







12,569Unrealized loss on derivatives, net of tax benefit of $570














(856
)


(856
)Unrealized foreign currency gain on translation adjustment














112,573



112,573Total comprehensive income










12,569



111,717



124,286Adjustment for implementation of SFAS No. 158, net of
    tax benefit of $2,286














3,430



3,430Balance at March 31, 2007





$
5,400,000


$
12,569


$
115,147


$
5,527,716    158




---



##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
  COMBINED STATEMENT OF CASH FLOWS
 For the Period from October 1, 2006 to March 31, 2007
 (Amounts in Thousands)
  CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
12,569Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


69,065Deferred income taxes


(4,573
)Gain on sale of property, plant, and equipment


(36
)Minority interest


566Changes in:Receivables


62,410Notes issued to related parties


(348,004
)Inventories


(146,091
)Costs and estimated earnings in excess of billings on
    uncompleted contracts


(17,207
)Other current assets


35,074Other noncurrent assets


71,154Accounts payable and other current liabilities


129,673Billings in excess of costs and estimated earnings on
    uncompleted contracts


105,597Other noncurrent liabilities


(46,255
)Net cash used in operating activities


(76,058
)CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for acquisition, net of cash acquired


(5,135,502
)Purchases of property, plant, and equipment


(49,311
)Proceeds from sale of property, plant, and equipment


1,480Net cash used in investing activities


(5,183,333
)CASH FLOWS FROM FINANCING ACTIVITIES:Invested capital


5,400,000EFFECT OF FOREIGN CURRENCY TRANSLATION


10,353NET INCREASE IN AND ENDING CASH AND CASH EQUIVALENTS

$
150,962SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest

$
936Cash paid for income taxes

$
135    159




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL STATEMENTS
  1.
    DESCRIPTION
    OF BUSINESS, BASIS OF FINANCIAL STATEMENT PRESENTATION AND
    SIGNIFICANT ACCOUNTING POLICIES  DESCRIPTION
    OF BUSINESS
        BASIS
    OF FINANCIAL STATEMENT PRESENTATION
    SIGNIFICANT
    ACCOUNTING POLICIES
  Use of estimates
  Revenue recognition
  No. 81-1,
 160




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
        Goodwill and other intangible assets
    Impairment of long-lived assets and definite-lived intangible
    assets
  Income taxes
  Translation of foreign currencies
 161




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Cash and cash equivalents
  Receivables
  Inventories first-in,
  Uranium inventory
  Property, plant, and equipment
    
    Buildings and improvements  13 to 55 years
    Machinery and equipment  3 to 12 years        Accounting For Asset
    Retirement Obligations and/or
 162




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Conditional Asset Retirement
    Obligations
  Settlement obligations and/or
  Environmental costs
  Segment reporting Disclosures About Segments of an Enterprise and Related
    Information
  Research and development expenditures
    Shipping and handling costs
 163




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Pensions and post-retirement benefits
    Employers Disclosures About
    Pensions and Other Postretirement Benefits Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans
  Derivative instruments Accounting for Derivative Instruments
    and Hedging Activities
      Operating leases
  Newly issued accounting pronouncements
  Fair Value Measurements
 164




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Accounting for Uncertainty in Income Taxes
  Accounting for Planned Major
    Maintenance Activities accrue-in-advance
  No. 06-3, How Taxes Collected From Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (That Is, Gross Versus Net Presentation)
 165




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  No. 06-3
  2.
    ACQUISITION    agreed-upon
    Current assets, including cash of $267,230

$
994,511Property, plant, and equipment


429,272Intangible assets


2,099,000Goodwill


2,801,025Other noncurrent assets


868,677Revolving credit facility


(50,000
)Other current liabilities


(905,453
)Noncurrent deferred taxes


(333,561
)Other noncurrent liabilities


(496,870
)Minority interest


(3,869
)Purchase price

$
5,402,732  166




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Asset Class

FMV


LifeProperty, plant, and equipment:Land

$
17,241



IndefiniteBuildings and improvements


125,943



13-55 yearsMachinery and equipment


231,461



3-12 yearsConstruction in progress


54,627Total

$
429,272Intangible assets:Contracted customer relationships

$
30,000



5-7 yearsNon-contracted customer relationships


208,000



25 yearsDeveloped technology


1,441,000



20-25 yearsBrand name


420,000



IndefiniteTotal

$
2,099,000   3.
    BUSINESS
    SEGMENTS      Nuclear Fuel
  Nuclear Services
  Nuclear Power Plants
 167




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Revenue:Nuclear fuel

$
417,182Nuclear services


644,766Nuclear power plants


63,521Corporate/eliminations


(1,350
)Total

$
1,124,119Operating profit (loss):Nuclear fuel

$
34,321Nuclear services


71,912Nuclear power plants


(15,420
)Corporate center


(62,589
)Total

$
28,224Total assets:Nuclear fuel

$
1,773,003Nuclear services


465,800Nuclear power plants


86,984Corporate center


5,256,798Total

$
7,582,585Depreciation expense:Nuclear fuel

$
11,637Nuclear services


9,514Nuclear power plants


875Corporate center


7,930Total

$
29,956       United States

$
792,944UK


119,270Sweden


112,469Other European countries


91,506Japan and Far East


6,504Other


1,426Total

$
1,124,119  168




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    United States

$
4,469,130UK


2,695,552Sweden


267,098Other European countries


143,078Japan and Far East


6,677Africa


1,050Total

$
7,582,585   4.
    DERIVATIVE
    INSTRUMENTS, HEDGING ACTIVITIES, AND CREDIT RISK DERIVATIVE
    INSTRUMENTS AND HEDGING ACTIVITIES         169




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    CREDIT
    RISK
      5.
    ASSET
    RETIREMENT OBLIGATIONS  and/or
      170




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Reconciliation of Asset Retirement Obligation LiabilityLiabilities assumed due to acquisition

$
142,500Liabilities settled


(2,800
)Accretion expense


3,307Balance, end of period

$
143,007   6.
    GOODWILL
    AND INTANGIBLE ASSETS    Goodwill acquired (see Note 2)

$
2,801,025Foreign currency translation adjustment


44,650Balance at March 31, 2007

$
2,845,675       LifeContracted customer relationships


5-7


$
30,000Non-contracted customer relationships


25



208,000Developed technology


20-25



1,441,000Brand name


Indefinite



420,000Total






2,099,000Accumulated amortization  contracted customer
    relationships





$
2,471Accumulated amortization  non-contracted customer
    relationships






4,440Accumulated amortization  developed technology






32,198Total accumulated amortization






39,109Foreign currency effect






26,387Intangible assets, net





$
2,086,278    171




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
      2008

$
78,0032009


78,0032010

$
78,0032011


78,0032012


77,203Thereafter


1,250,676Total

$
1,639,891   7.
    EMPLOYEE
    BENEFIT PLANS    Before Application





After Applicationof SFAS No. 158


Adjustment


of SFAS No. 158Benefit obligations

$
206,556


$
(5,716
)

$
200,840Deferred tax liability






2,286



2,286Accumulated other comprehensive income






3,430



3,430Total recognized

$
206,556


$



$
206,556   PENSION
    PLANS
   172




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Belgium


Germany


Sweden


USA


TotalService cost

$
381


$
253






$
17,126


$
17,760Interest cost


706



1,110


$
1,085



7,986



10,887Expected return on plan assets


(871
)










(8,924
)


(9,795
)Net periodic pension cost

$
216


$
1,363


$
1,085


$
16,188


$
18,852     Belgium


Germany


Sweden


USADiscount rate for obligations


4.25
%


4.10
%


4.00
%


5.75
%Discount rate for expense


4.25



4.10



4.00



5.75Compensation increase rate for obligations


3.50



3.00



N/A



3.50Compensation increase rate for expense


3.50



3.00



N/A



3.50Long-term rate of return on plan assets


5.20



N/A



N/A



8.50    173




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Belgium


Germany


Sweden


USA


TotalAccumulated Benefit Obligation

$
28,594


$
55,610


$
52,841


$
300,792


$
437,837Change in Benefit ObligationBenefit obligation, beginning of period

$
32,398


$
51,961


$
50,022


$
310,173


$
444,554Service cost


381



253







17,127



17,761Interest cost


706



1,110



1,085



7,987



10,888Employee contributions


139











2,970



3,109Actuarial loss (gain)


764



1,733



(13
)


1,091



3,575Foreign currency exchange rate changes


68



2,290



2,246







4,604Benefits paid


(90
)


(1,463
)


(481
)


(1,689
)


(3,723
)Benefit obligation, end of period

$
34,366


$
55,884


$
52,859


$
337,659


$
480,768Change in Plan AssetsPlan assets at fair value, beginning of period

$
30,031


$



$



$
223,948


$
253,979Actual return on plan assets


2,182











21,992



24,174Employee contributions


139











2,970



3,109Employer contributions


448



1,463



481



39,535



41,927Benefits paid from plan assets


(90
)


(1,463
)


(481
)


(1,689
)


(3,723
)Plan assets at fair value, end of period

$
32,710


$



$



$
286,756


$
319,466Accrued Cost as Included in the Combined Balance SheetOther current liabilities

$



$
2,910


$
1,258


$
147


$
4,315Noncurrent benefit obligation


1,656



52,974



51,601



50,756



156,987Net benefit obligation

$
1,656


$
55,884


$
52,859


$
50,903


$
161,302Net Actuarial Gain/(Loss) Recognized in Accumulated Other
    Comprehensive Income

$
295


$
(4,023
)

$
(2,714
)

$
11,976


$
5,534          174




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Revised PolicyPrior Policy Index Weight

Index Weight


Market Benchmark Index55%


50
%

Wilshire 500015


20


MSCI ACWI ex-US30


30


Lehman Aggregate Bond Index     Asset Class

Market Benchmark IndexDomestic Equity

Wilshire 5000International Equity

MSCI ACWI ex-USFixed Income

Lehman Aggregate Bond IndexCash Equivalents

US Treasury Bills     Asset Category

Target


ActualUS equity securities


50
%


50
%Non-US equity securities


20



20Debt securities


30



30Total


100
%


100
%     Belgium


Germany


Sweden


USA


Total2008

$
3,806


$
2,979


$
1,283


$
3,803


$
11,8712009


5,422



3,208



1,516



7,255



17,4012010


1,686



3,301



1,735



9,390



16,1122011


1,510



3,442



2,004



11,946



18,9022012


2,516



3,616



2,372



14,866



23,3702013-2017


13,685



18,714



13,604



131,717



177,720     Belgium

Germany

Sweden

USA

TotalExpected contributions

$
190


$
2,979


$
1,283


$
34,996


$
39,448  175




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  OTHER
    POST-RETIREMENT BENEFITS
        Net Periodic Post-Retirement Benefit CostService cost

$
1,177Interest cost


1,918Expected return on plan assets


(1,120
)Net periodic pension cost

$
1,975     Discount rate for obligations


5.75
%Discount rate for expense


5.75Health care cost trend ratesPre-age 65


5.00Post-age 65


11.00Compensation increase rate for obligations


3.50Compensation increase rate for expense


3.50Long-term rate of return on plan assets


7.25     1% Increase

1% DecreaseEffect on total service and interest costs

$
787


$
(600
)Effect on post-retirement benefit obligation


7,934



(6,168
)  176




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Change in Benefit ObligationBenefit obligation, beginning of period

$
72,315Service cost


1,177Interest cost


1,918Actuarial gain


(205
)Benefits paid


(2,733
)Benefit obligation, end of period

$
72,472Change in Plan AssetsPlan assets at fair value, beginning of period

$
32,545Actual return on plan assets


1,092Employer contributions


2,030Benefits paid from plan assets


(2,733
)Plan assets at fair value, end of period

$
32,934Accrued Cost as Included in the Combined Balance SheetNoncurrent benefit obligations

$
39,538Net Actuarial Gain Recognized in Accumulated Other Comprehensive
    Income

$
182     2008

$
3,0112009


3,6542010


4,0472011


4,4022012


4,4792013-2017


24,267   SAVINGS
    PLAN
    8.
    INCOME
    TAXES     177




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Current income taxesFederal

$
1,327State


(404
)Foreign


13,513Total current income taxes


14,436Deferred income taxesFederal


712State


250Foreign


(5,535
)Total deferred income taxes


(4,573
)Total income tax provision presented in consolidated statement
    of operations

$
9,863     Domestic income

$
3,360Foreign income


19,638Income before income taxes

$
22,998     Income tax expense, computed at the statutory rate of 35%

$
8,049State income tax, net of federal income tax effect


(100
)Tax differential on foreign earnings


2,495Nondeductible expenses


(581
)Total income tax expense

$
9,863Effective tax rate


42.9
%  178




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Net operating loss carryforwards

$
350,647Goodwill and intangibles


(498,176
)Fixed assets


(352,943
)Decommissioning


48,980Compensation and benefits


32,624Deferred revenue and contract reserves


24,918Interest


10,028Product warranty


15,110General legal liability


10,670Inventory


6,896Restructuring


2,383Other financial reserves


1,378Other


10,094Valuation allowance


(16,817
)Total net deferred income tax liabilities

$
(354,208
)     Current deferred tax assets

$
84,041Current deferred tax liabilities


(31,408
)Net current deferred tax asset


52,633Noncurrent deferred tax assets, net of a valuation of $16,817 at
    March 31, 2007


510,467Noncurrent deferred tax liabilities


(917,308
)Net noncurrent deferred tax liabilities


(406,841
)Total net deferred income tax liabilities

$
(354,208
)      179




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  9.
    CUSTOMER
    RECEIVABLES    Customer receivables

$
249,282Less allowance for doubtful accounts


707Customer receivables, net

$
248,575     10.
    INVENTORIES    Raw materials and consumables

$
61,957Work in process


90,959Finished goods


100,092Engineering inventory


19,519Uranium inventory


107,399Gross inventories


379,926Reserves for inactive and obsolete stock


(18,186
)Inventories

$
361,740     11.
    PROPERTY,
    PLANT, AND EQUIPMENT    Land

$
17,864Buildings and improvements


127,932Machinery and equipment


261,072Construction in progress


76,138Total


483,006Less accumulated depreciation


29,319Property, plant, and equipment, net

$
453,687     Cost of goods sold

$
17,893Marketing, administrative, and general


12,063Total

$
29,956  180




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  12.
    OTHER
    NONCURRENT ASSETS    Uranium working stock

$
833,556Other


6,895Other noncurrent assets

$
840,451     13.
    DEBT AND
    CREDIT FACILITIES  Revolving credit facility
  Accounts receivable securitization program
   181




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
  14.
    OTHER
    CURRENT AND NONCURRENT LIABILITIES    Contract reserves

$
54,551Vacation liability


56,937Accrued product warranty


24,489Accrued payroll and other employee compensation


41,255Accrued income and other taxes


35,323Reserve for restructured operations


5,801Obligations under capital leases


483Reserve for decommissioning matters


1,375Benefit obligation


4,315Accrued royalties and commissions


9,652Environmental liabilities


4,466Accrued medical insurance claims


7,400Contractually obligated liabilities


35,019Other


30,592Other current liabilities

$
311,658Accrued product warranty

$
17,204Obligations under capital leases


2,667Reserve for legal liability


25,991Environmental liabilities


9,383Unfavorable lease reserve


9,874Accrued severance


1,499Reserve for contract losses


4,731Other


9,311Other noncurrent liabilities

$
80,660   15.
    STOCKHOLDERS
    EQUITY       182




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    16.
    COMMITMENTS
    AND CONTINGENCIES  Settlement Obligations
  and/or
        Warranties
  Liabilities assumed due to acquisition

$
44,258Liabilities settled


(7,839
)Additional liabilities accrued


5,138Foreign currency translation effect


136Balance, end of period

$
41,693   General
 183




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##### Table of Contents



TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Environmental Matters
      Commitment
  17.
    LEASES      For the period ended March 31,2008

$
18,4282009


15,9222010


12,7882011


16,2862012


4,312Thereafter


7,152Minimum lease payments

$
74,888  184




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TOSHIBA
    NUCLEAR ENERGY HOLDINGS (US), INC. AND
    TOSHIBA NUCLEAR ENERGY HOLDINGS (UK) LTD.
    NOTES TO COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Unamortized asset balance

$
4,113Accumulated amortization


166Net asset balance

$
3,947     18.
    OTHER
    INCOME AND EXPENSES    Interest expense

$
(12,138
)Interest income


7,691Gain on foreign currency transactions, net


773Other


(1,552
)Total

$
(5,226
)   19.
    RESTRUCTURING
    MATTERS    and/or
    Liabilities assumed due to acquisition

$
7,556Liabilities settled


(1,755
)Balance, end of period

$
5,801   20.
    RELATED-PARTY
    TRANSACTIONS     185




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosures  Previous
    Independent Registered Public Accounting Firm
  Form 8-K Form 10-Q Form 8-K
      Regulation SK),
  
    E&C Segment Control Environment Deficiency A material weakness arising from the internal
    control over financial reporting within our E&C segment
    that resulted from a lack of emphasis on our internal controls
    and procedures and from inadequate communication of project
    concerns on a timely basis.
    E&C Segment Project Reporting Deficiency A material weakness resulting from the
    insufficient design of policies and procedures to ensure
    reasonable estimates are maintained and reported on contracts
    within our E&C segment with total revenues of less than
    $50 million.
    Complex Accounting Matters and Insufficient Accounting
    Resources Deficiency A material weakness
    resulting from insufficient accounting resources to properly
    analyze, record and disclose accounting matters.
    Accounting for Stock Options Deficiency A
    material weakness resulting from the misapplication of GAAP
    relating to recording compensation expense in accordance with
    APB Opinion No. 25, Accounting for Stock Issued to
    Employees. Shaw restated its consolidated financial statements
    for the years ended August 31, 2001, through 2005 to record
    non-cash, stock-based compensation expense related to this stock
    option grant;
    Revenue Recognition Deficiency A material
    weakness resulting from the recognition of revenue on one
    contract accounted for under the percentage-of-completion method
    due to a clerical error in the computation. . Shaws
    condensed consolidated financial statements for the three-month
    and six-month periods ended February 28, 2006, were
    restated to correct this error; and
    Application of FIN 46(R) Deficiency A
    material weakness resulting from the misapplication of GAAP
    relating to consolidation accounting under FIN 46(R) for a
    minority interest in one variable interest entity for which we
    are the primary beneficiary. Shaws condensed consolidated
    financial statements for the three-month and six-month periods
    ended February 28, 2006, were restated to correct this
    error.  Form 8-K
 186




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##### Table of Contents



New
    Independent Registered Public Accounting Firm
  Form 10-Q,
  Regulation S-K Regulation S-K).
  Item 9A.
    Controls
    and Procedures  a)
    Managements
    Quarterly Evaluation of Disclosure Controls and
    Procedures  Rules 13a-15(e) 15d-15(e)
  b)
    Managements
    Annual Report on Internal Control Over Financial
    Reporting  Rules 13a-15(f) 15d-15(f)
     187




---



##### Table of Contents



Internal Control 
    Integrated Framework
  Identification
    of Material Weaknesses
    1.
    Control
    Environment over Financial Reporting    
    We lacked adequate training programs and job descriptions to
    clearly communicate managements and employees roles
    and responsibilities in our internal control over financial
    reporting;
    We lacked formal or consistent policies and procedures and an
    effective assignment of authority and responsibility for the
    initiation and processing of transactions in key areas of our
    internal control over financial reporting; and
    We lacked a sufficient number of accounting, tax, and finance
    professionals to perform supervisory reviews and monitoring
    activities over financial reporting matters and controls.  Complex and Non-Routine Accounting Matters Period-End Financial Reporting Process
  2.
    Complex
    or Non-Routine Accounting Matters  and/or
  3.
    Period-End
    Financial Reporting Process    
    We lacked sufficient policies and procedures to ensure journal
    entries, both recurring and non-recurring, are accompanied by
    sufficient supporting documentation and are adequately reviewed
    and approved for validity, completeness and accuracy prior to
    being recorded;
    We lacked sufficient policies and procedures to ensure account
    reconciliations were properly and timely prepared with adequate
    supporting documentation and were reviewed for completeness,
    accuracy and timely resolution of reconciling items;
    We lacked sufficient policies and procedures for our period-end
    reporting to capture and accrue costs incurred but not yet
    invoiced by third party suppliers and contractors; and
    We lacked sufficient policies and procedures to ensure the
    completeness, accuracy, and timeliness of the recording of
    financial results of certain of our joint ventures. 188




---



##### Table of Contents



Form 10-Q/A
  4 E&C Segment Control Environment
    Deficiency
  5 E&C Segment Project Reporting
    Deficiency 
  Form 10-Q/A
  Form 10-K,
  c)
    Remediation
    of Material Weaknesses in Process         189




---



##### Table of Contents



Form 10-K. Form 10-K
    d)
    Changes
    in Internal Control over Financial Reporting    
    Accounting for Stock Options Deficiency  this
    material weakness resulted from the misapplication of GAAP
    relating to recording compensation expense in accordance with
    APB Opinion No. 25, Accounting for Stock Issued to
    Employees. Our procedures now include recording stock options at
    the appropriate grant date.
    Revenue Recognition Deficiency  this material
    weakness resulted from a clerical error in the computation of
    the revenue recognized on one contract accounted for under the
    percentage-of-completion method. Our remedial measures included:
    (1) implementation of a standardized template for revenue
    recognition for contracts accounted for under the
    percentage-of-completion method where practical;
    (2) performing comprehensive reviews when the template is
    not used; and (3) training for the personnel who perform
    and review the revenue recognition calculations.  Item 9B.
    Other
    Information   190




---



##### Table of Contents



PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Directors
  J. M. Bernhard, Jr.
  James F. Barker
  Thos. E. Capps
  L. Lane Grigsby
  Daniel A. Hoffler
  David W. Hoyle
  Michael J. Mancuso
 191




---



##### Table of Contents



Albert D. McAlister
  Charles E. Roemer, III not-for-profit
  Executive
    Officers
    Name

Age


PositionJ.M. Bernhard, Jr.


53


Chairman of the Board of Directors, President and Chief
    Executive OfficerDavid P. Barry


56


President of the Nuclear Division of the Power GroupRobert L. Belk


58


Executive Vice PresidentDavid L. Chapman, Sr.


61


President of the Fabrication & Manufacturing (F&M)
    GroupBrian K. Ferraioli


52


Executive Vice President and Chief Financial OfficerRichard F. Gill


64


Executive Vice President, Chairman of the Executive Committee
    and President of the Power GroupR. Monty Glover


53


President of the Fossil Division of the Power GroupGary P. Graphia


45


Executive Vice President, Corporate Development and StrategyD. Ron McCall


59


President of the Maintenance GroupRonald W. Oakley


57


President of the Environmental & Infrastructure (E&I)
    GroupLou Pucher


64


President of the Energy & Chemicals (E&C) GroupClifton S. Rankin


39


Corporate Secretary and General CounselDirk J. Wild


40


Vice President and Chief Accounting Officer   J.M. Bernhard, Jr.
  David P. Barry
 192




---



##### Table of Contents



Robert L. Belk
  David L. Chapman, Sr.
  Brian K. Ferraioli
  Richard F. Gill non-director
  R. Monty Glover
  Gary P. Graphia
 193




---



##### Table of Contents



D. Ron McCall
  Ronald W. Oakley
  Lou Pucher
  Clifton S. Rankin
  Dirk J. Wild
  Code
    of Corporate Conduct and Ethics
  Form 10-K, www.shawgrp.com
        194




---



##### Table of Contents



Item 11.
    Executive
    Compensation  Form 10-K,
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K,
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K,
  Item 14.
    Principal
    Accounting Fees and Services  Form 10-K,
 195




---



##### Table of Contents



PART IV
  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Form 10-K.
  Financial Statements.
  10-K.
  10-K
  Combined Financial Statements of Toshiba Nuclear Energy Holdings
    (US), Inc. and Toshiba Nuclear Energy Holdings (UK) Ltd.Report of Independent Registered Public Accounting
    Firm  Ernst & Young LLPCombined Balance Sheet as of March 31, 2007Combined Statement of Operations for the period from
    October 1, 2006 to
    March 31, 2007Combined Statement of Stockholders Equity for the period
    from October 1, 2006 to March 31, 2007Combined Statement of Cash Flows for the period from
    October 1, 2006 to
    March 31, 2007Notes to Combined Financial Statements   Financial Statement Schedules.
    Exhibits.
  Form 10-K. Regulation S-K.
  SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference2
.1

Investment Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings Corporation (US)
    Inc., a Delaware corporation (the US Company), The
    Shaw Group Inc. (the Company) and Nuclear Energy
    Holdings, L.L.C. (NEH)

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

2.012
.2

Investment Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings (UK) Limited, a
    company registered in England with registered number 5929672
    (the UK Company), the Company and NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

2.02 196




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference3
.1

Amendment to and Restatement of the Articles of Incorporation of
    the Company dated February 23, 2007

The Shaw Group Inc. Annual Report on Form 10-K/A (Amendment No.
    1) for the fiscal year ended August 31, 2006

1-12227

3.13
.2

Amended and Restated By-Laws of the Company dated as of
    January 30, 2007

The Shaw Group Inc. Annual Report on Form 10-K/A (Amendment No.
    1) for the fiscal year ended August 31, 2006

1-12227

3.24
.1

Specimen Common Stock Certificate4
.2

Rights Agreement, dated as of July 9, 2001, between the
    Company and First Union National Bank, as Rights Agent,
    including the Form of Articles of Amendment to the Restatement
    of the Articles of Incorporation of the Company as
    Exhibit A, the form of Rights Certificate as Exhibit B
    and the form of the Summary of Rights to Purchase Preferred
    Shares as Exhibit C
    (Exhibit A-1
    and A-2)

The Shaw Group Inc. Registration Statement on Form 8-A filed on
    July 30, 2001

1-12227

99.14
.3

Indenture dated as of May 1, 2001, between the Company and
    United States Trust Company of New York including Form of
    Liquid Yield
    Optiontm
    Note due 2021 (Zero Coupon-Senior)

The Shaw Group Inc. Current Report on Form 8-K filed on May 11,
    2001

1-12227

4.14
.4

Registration Rights Agreement dated as of May 1, 2001,
    between the Company, and Merrill Lynch & Co. and
    Merrill Lynch, Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on May 11,
    2001

1-12227

4.24
.5

Indenture dated as of March 17, 2003 by and among the
    Company, the Subsidiary Guarantors party thereto, and The Bank
    of New York, as trustee, including form of
    103/4% Senior
    Note due 2010

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

4.14
.6

Form of
    103/4% Senior
    Note Due 2010

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

(Included as
    Exhibit 1 to the
    Indenture
    incorporated by
    reference as
    Exhibit 4.5
    hereto). 197




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference4
.7

Third Supplemental Indenture dated as of April 25, 2005, by
    and among the Company, as issuer, its subsidiaries signatories
    thereto, as subsidiary guarantors, and The Bank of New York, a
    New York banking corporation, as trustee, with respect to
    the
    103/4% Senior
    Notes Due 2010

The Shaw Group Inc. Current Report on Form 8-K filed on May 2,
    2005

1-12227

4.14
.8

Registration Rights Agreement dated as of March 17, 2003 by
    and among the Company and Credit Suisse First Boston LLC, UBS
    Warburg LLC, BMO Nesbitt Burns Corp., Credit Lyonnais Securities
    (USA) Inc., BNP Paribas Securities Corp. and U.S. Bancorp Piper
    Jaffray Inc.

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

4.2*10
.1

The Shaw Group Inc. 2001 Employee Incentive Compensation Plan,
    amended and restated through April 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.4*10
.2

Form of Incentive Stock Option Agreement under The Shaw Group
    Inc. 2001 Employee Incentive Compensation Plan (as amended and
    restated)

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.6*10
.3

Form of Non-Qualified Stock Option Agreement under The Shaw
    Group Inc. 2001 Employee Incentive Compensation Plan (as amended
    and restated)

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.5*10
.4

Form of Restricted Stock Agreement under The Shaw Group Inc.
    2001 Employee Incentive Compensation Plan

The Shaw Group Inc. Current Report on Form 8-K filed on October
    12, 2004

1-12227

10.3*10
.5

The Shaw Group Inc. Stone & Webster Acquisition Stock
    Option Plan

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    June 12, 2001

333-62856

4.6*10
.6

The Shaw Group Inc. 1993 Employee Stock Option Plan amended and
    restated through October 8, 2001

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2001

1-12227

10.1 198




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.7

The Shaw Group Inc. 2005 Non-Employee Director Stock Incentive
    Plan, amended and restated through April 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the fiscal year ended May 31, 2006

1-12227

10.7*10
.8

Form of Nonqualified Stock Option Agreement under the 2005
    Non-Employee Director Stock Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on January
    31, 2006

1-12227

10.2*10
.9

Form of Phantom Stock Agreement under the 2005 Non-Employee
    Director Stock Incentive Plan

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.8*10
.10

The Shaw Group Non-Employee Director Compensation Summary*10
.11

Flexible Perquisites Program for certain executive officers

The Shaw Group Inc. Current Report on Form 8-K filed on November
    1, 2004

1-12227

Description
    contained
    under Item
    1.01 of the
    referenced
    Form 8-K*10
.12

The Shaw Group Inc. 2005 Management Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on March 3,
    2006

1-12227

10.1*10
.13

Fiscal year 2007 target incentive awards established for
    executive officers of the Company under the 2005 Management
    Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on November
    2, 2006

1-12227

Description
    contained
    under Item
    1.01 of the
    referenced
    Form 8-K*10
.14

Employment Agreement dated as of January 23, 2007, by and
    between the Company and J.M. Bernhard, Jr.

The Shaw Group Inc. Current Report on Form 8-K filed on January
    25, 2007

1-12227

10.1*10
.15

Employment Agreement dated as of May 1, 2000, by and
    between the Company and Robert L. Belk

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2000

1-12227

10.8*10
.16

Amendment to Employment Agreement of Robert L. Belk dated as of
    December 1, 2004

The Shaw Group Inc. Current Report on Form 8-K filed on December
    3, 2004

1-12227

10.1*10
.17

Third Amendment to Employment Agreement of Robert L. Belk dated
    December 31, 2006

The Shaw Group Inc. Quarterly Report Form 10-Q for the quarter
    ended November 30, 2006

1-12227

10.14*10
.18

Fourth Amendment to Employment Agreement of Robert L. Belk dated
    July 6, 2007

The Shaw Group Inc. Current Report on Form 8-K filed July 11,
    2007

1-12227

10.1 199




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.19

Employment Agreement effective as of August 13, 2003, by
    and between the Company and Richard F. Gill*10
.20

Employment Agreement of David L. Chapman, Sr. dated
    April 6, 2002

The Shaw Group Inc. Current Report on Form 8-K filed December
    24, 2003

1-12227

99.1*10
.21

Amendment to Employment Agreement of David L. Chapman, Sr.,
    dated November 29, 2004 (with an effective date of
    April 1, 2005)

The Shaw Group Inc. Current Report on Form 8-K filed on January
    12, 2005

1-12227

10.1*10
.22

Employment Agreement of Dorsey Ron McCall dated July 29,
    2002

The Shaw Group Inc. Current Report on Form 8-K filed on December
    24, 2003



99.3*10
.23

Summary of oral severance agreement with Dirk J. Wild dated
    October 13, 2004

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2004

1-12227

Description
    contained
    under Item
    5.02 of the
    referenced
    Form 8-K*10
.24

Employment Agreement of Gary P. Graphia dated October 14,
    2005

The Shaw Group Inc. Current Report on Form 8-K filed on October
    14, 2005

1-12227

10.1*10
.25

First Amendment to Employment Agreement of Gary P. Graphia dated
    as of May 7, 2007

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended May 31, 2007

1-12227

10.3*10
.26

Employment Agreement of David P. Barry effective as of
    March 13, 2006

The Shaw Group Inc. Current Report on Form 8-K filed on March
    14, 2006



10.1*10
.27

Employment Agreement of G. Patrick Thompson effective as of
    July 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.3*10
.28

Employment Agreement of Ronald W. Oakley dated effective as of
    August 3, 2006

The Shaw Group Inc. Current Report in Form 8-K filed on August
    4, 2006

1-12227

10.1*10
.29

Employment Agreement and Nondisclosure and Noncompetition
    Agreement, both dated January 15, 2007, by and between the
    Company and Ebrahim Fatemizadeh

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended February 28, 2007

1-12227

10.4*10
.30

Agreement effective as of November 18, 2006 by and between
    the Company and Thomas A. Barfield, Jr.

The Shaw Group Inc. Current Report on Form 8-K filed on February
    2, 2007

1-12227

10.1 200




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.31

Employment Agreement dated as of May 7, 2007, and related
    Nondisclosure and Noncompetition Agreement by and between the
    Company and Clifton Scott Rankin

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended May 31, 2007

1-12227

10.4*10
.32

Summary of certain compensation payable to Michael J. Mancuso
    for services as a director of the Company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    16, 2006



Description
    contained
    under Item
    1.01 of the
    referenced
    Form 8-K*10
.33

Summary of certain compensation payable to Thos E. Capps for
    services as a director of the Company

The Shaw Group Inc. Current Report on Form 8-K/A filed on
    October 5, 2007



Description
    contained
    under Item
    5.02 of the
    referenced
    Form 8-K*10
.34

Employee Indemnity Agreement dated as of July 12, 2007
    between the Company and Brian K. Ferraioli*10
.35

Employment Agreement effective as of July 17, 2007 between
    the Company and Brian K. Ferraioli

The Shaw Group Inc. Current Report on Form 8-K filed on October
    15, 2007

1-12227

10.1*10
.36

The Shaw Group Inc. 401(k) Plan

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    May 4, 2004

333-115155

4.6*10
.37

The Shaw Group Inc. 401(k) Plan for Certain Hourly Employees

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    May 4, 2004

333-115155

4.6*10
.38

Trust Agreement, dated as of January 2, 2007 by and
    between the Company and Fidelity Management Trust Company
    for The Shaw Group Deferred Compensation Plan Trust

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended February 28, 2007

1-12227

10.610
.39

Asset Purchase Agreement, dated as of July 14, 2000, among
    Stone & Webster, Incorporated, certain subsidiaries of
    Stone & Webster, Incorporated and Company

The Shaw Group Inc. Current Report on Form 8-K filed on July 28,
    2000

1-12227

2.1 201




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.40

Composite Asset Purchase Agreement, dated as of January 23,
    2002, by and among the Company, The IT Group, Inc. and certain
    subsidiaries of The IT Group, Inc., including the following
    amendments:(i) Amendment No. 1, dated January 24,
    2002, to Asset Purchase Agreement, (ii) Amendment
    No. 2, dated January 29, 2002, to Asset Purchase
    Agreement, and (iii) a letter agreement amending
    Section 8.04(a)(ii) of the Asset Purchase Agreement, dated
    as of April 30, 2002, between The IT Group, Inc. and the
    Company

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.110
.41

Amendment No. 3, dated May 2, 2002, to Asset Purchase
    Agreement by and among the Company, The IT Group, Inc. and
    certain subsidiaries of The IT Group, Inc.

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.210
.42

Amendment No. 4, dated May 3, 2002, to Asset Purchase
    Agreement by and among the Company, The IT Group, Inc. and
    certain subsidiaries of the IT Group, Inc.

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.310
.43

$450,000,000 Credit Agreement dated as of April 25, 2005,
    by and among the Company, BNP Paribas and The Other Lenders
    Signatory Thereto, BNP Paribas Securities Corp., Bank of
    Montreal, Credit Suisse First Boston, UBS Securities LLC,
    Regions Bank and Merrill Lynch Pierce, Fenner & Smith,
    Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on April
    28, 2005

1-12227

10.1 202




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.44

Amendment No. 1 dated as of October 3, 2005, to that
    certain $450,000,000 Credit Agreement dated April 25, 2005,
    by and among the Company, BNP Paribas and The Other Lenders
    Signatory Thereto, BNP Paribas Securities Corp., Bank of
    Montreal, Credit Suisse First Boston, UBS Securities LLC,
    Regions Bank and Merrill Lynch Pierce, Fenner & Smith,
    Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on October
    4, 2005

1-12227

10.110
.45

Amendment No. 2 dated as of February 27, 2006, to that
    certain $450,000,000 Credit Agreement dated April 25, 2005,
    by and among the Company, BNP Paribas and The Other Lenders
    Signatory Thereto, BNP Paribas Securities Corp., Bank of
    Montreal, Credit Suisse First Boston, UBS Securities LLC,
    Regions Bank and Merrill Lynch Pierce, Fenner & Smith,
    Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on February
    28, 2006

1-12227

10.110
.46

Amendment No. 3 dated as of June 20, 2006, to that
    certain $450,000,000 Credit Agreement dated April 25, 2005,
    by and among the Company, BNP Paribas and The Other Lenders
    Signatory Thereto, BNP Paribas Securities Corp., Bank of
    Montreal, Credit Suisse First Boston, UBS Securities LLC,
    Regions Bank and Merrill Lynch Pierce, Fenner & Smith,
    Incorporated

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2006

1-12227

10.38 203




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.47

Amendment No. 4 dated as of October 13, 2006, among
    the Company, as borrower; the subsidiaries of the Company
    signatories thereto, as guarantors; BNP Paribas, as
    administrative agent; BNP Paribas Securities Corp., as joint
    lead arranger and sole bookrunner; Bank of Montreal, as joint
    lead arranger; Credit Suisse First Boston, acting through its
    Cayman branch, as
    co-syndication
    agent; UBS Securities LLC, as
    co-syndication
    agent; and the other lenders signatory thereto

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.110
.48

Waiver dated as of January 18, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated
    April 25, 2005, as amended

The Shaw Group Inc. Current Report on Form 8-K filed on January
    18, 2007

1-12227

10.110
.49

Waiver dated as of March 19, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated
    April 25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on March
    19, 2007

1-12227

10.110
.50

Waiver dated as of April 16, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated
    April 25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on April
    17, 2007

1-12227

10.110
.51

Waiver dated as of July 16, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated
    April 25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on July 16,
    2007

1-12227

10.110
.52

Waiver dated as of August 30, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated
    April 25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on
    September 6, 2007

1-12227

10.1 204




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.53

Put Option Agreement, dated as of October 13, 2006, between
    NEH and Toshiba related to shares in the US acquisition company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.210
.54

Put Option Agreement, dated as of October 13, 2006, between
    NEH and Toshiba related to shares in the UK acquisition company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.310
.55

Shareholders Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings (US) Inc. the US
    Company, NEH, TSB Nuclear Energy Investment US Inc., a Delaware
    corporation and a wholly owned subsidiary of Toshiba and
    Ishikawajima-Harima Heavy Industries Co., Ltd., a corporation
    organized under the laws of Japan (IHI)

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.410
.56

Shareholders Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings (UK) Inc., the UK
    Company, NEH, IHI and TSB Nuclear Energy Investment UK Limited,
    a company registered in England with registered number 5929658

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.510
.57

Bond Trust Deed, dated October 13, 2006, between NEH
    and The Bank of New York, as trustee

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.610
.58

Parent Pledge Agreement, dated October 13, 2006, between
    the Company and The Bank of New York

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.710
.59

Issuer Pledge Agreement, dated October 13, 2006, between
    NEH and The Bank of New York

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.810
.60

Deed of Charge, dated October 13, 2006, among NEH, The Bank
    of New York, as trustee, and Morgan Stanley Capital Services
    Inc., as swap counterparty

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.9 205




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.61

Transferable Irrevocable Direct Pay Letter of Credit (Principal
    Letter of Credit) effective October 13, 2006 of Bank of
    America in favor of NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.1010
.62

Transferable Irrevocable Direct Pay Letter of Credit (Interest
    Letter of Credit) effective October 13, 2006 of Bank of
    America in favor of NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.1110
.63

Reimbursement Agreement dated as of October 13, 2006,
    between the Company and Toshiba

The Shaw Group Inc. Current Report on Form
    8-K filed on
    October 18, 2006

1-12227

10.12*10
.64

Employment Agreement effective as of July 3, 2007, and
    related Nonsolicitation and Noncompete Agreement by and between
    the Company and R. Monty Glover14
.1

The Shaw Group Inc. Code of Corporate Conduct dated June 200614
.2

The Shaw Group Inc. Code of Ethics for Chief Executive Officer
    and Senior Financial Officers (adopted as of December 16,
    2003)14
.3

The Shaw Group Inc. Insider Trading Policy dated June 200621
.1

Subsidiaries of The Shaw Group Inc.23
.1

Consent of KPMG LLP, independent registered public accounting
    firm of The Shaw Group Inc.23
.2

Consent of Ernst & Young LLP, former independent
    registered public accounting firm of The Shaw Group Inc.23
.3

Consent of Ernst & Young LLP, independent registered
    public accounting firm of Toshiba Nuclear Energy Holdings (US),
    Inc. and Toshiba Nuclear Energy Holdings (UK) Ltd.31
.1

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 206




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference31
.2

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2

Certification pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  207




---



##### Table of Contents



SIGNATURES
      J.
    M. Bernhard, Jr.
  By:
    J. M. Bernhard, Jr.      Signature

Title/s/  J.
    M. Bernhard, Jr.J.
    M. Bernhard, Jr.

Chairman of the Board, Chief Executive Officer
    and Director
    (Principal Executive Officer)/s/  Brian
    K. FerraioliBrian
    K. Ferraioli

Chief Financial Officer
    (Principal Financial Officer and Principal Accounting Officer)/s/  Albert
    D. McAlisterAlbert
    D. McAlister

Director/s/  L.
    Lane GrigsbyL.
    Lane Grigsby

Director/s/  David
    W. HoyleDavid
    W. Hoyle

Director/s/  James
    F. BarkerJames
    F. Barker

Director/s/  Charles
    E. Roemer, IIICharles
    E. Roemer, III

Director/s/  Daniel
    A. HofflerDaniel
    A. Hoffler

Director/s/  Michael
    J. MancusoMichael
    J. Mancuso

Director/s/  Thomas
    E. CappsThomas
    E. Capps

Director  208




---



##### Table of Contents



THE SHAW
    GROUP INC.
    EXHIBIT INDEX
  Form 10-K. Regulation S-K.
  SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference2
.1

Investment Agreement, dated as of October 4, 2006, by and among
    Toshiba, Toshiba Nuclear Energy Holdings Corporation (US) Inc.,
    a Delaware corporation (the US Company), The Shaw
    Group Inc. (the Company) and Nuclear Energy
    Holdings, L.L.C. (NEH)

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

2.012
.2

Investment Agreement, dated as of October 4, 2006, by and among
    Toshiba, Toshiba Nuclear Energy Holdings (UK) Limited, a company
    registered in England with registered number 5929672 (the
    UK Company), the Company and NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

2.023
.1

Amendment to and Restatement of the Articles of Incorporation of
    the Company dated February 23, 2007

The Shaw Group Inc. Annual Report on Form 10-K/A (Amendment No.
    1) for the fiscal year ended August 31, 2006

1-12227

3.13
.2

Amended and Restated By-Laws of the Company dated as of January
    30, 2007

The Shaw Group Inc. Annual Report on Form 10-K/A (Amendment No.
    1)

1-12227

3.2for the fiscal year ended August 31, 20064
.1

Specimen Common Stock Certificate4
.2

Rights Agreement, dated as of July 9, 2001, between the Company
    and First Union National Bank, as Rights Agent, including the
    Form of Articles of Amendment to the Restatement of the Articles
    of Incorporation of the Company as Exhibit A, the form of Rights
    Certificate as Exhibit B and the form of the Summary of Rights
    to Purchase Preferred Shares as Exhibit C (Exhibit A-1 and A-2)

The Shaw Group Inc. Registration Statement on Form 8-A filed on
    July 30, 2001

1-12227

99.1 209




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference4
.3

Indenture dated as of May 1, 2001, between the Company and
    United States Trust Company of New York including Form of Liquid
    Yield
    Optiontm
    Note due 2021 (Zero Coupon-Senior)

The Shaw Group Inc. Current Report on Form 8-K filed on May 11,
    2001

1-12227

4.14
.4

Registration Rights Agreement dated as of May 1, 2001, between
    the Company, and Merrill Lynch & Co. and Merrill Lynch,
    Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on May 11,
    2001

1-12227

4.24
.5

Indenture dated as of March 17, 2003 by and among the Company,
    the Subsidiary Guarantors party thereto, and The Bank of  New
    York, as trustee, including form of
    103/4% Senior
    Note due 2010

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

4.14
.6

Form of
    103/4% Senior
    Note Due 2010

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

(Included as
    Exhibit 1 to
    the Indenture
    incorporated
    by reference as
    Exhibit 4.5
    hereto).4
.7

Third Supplemental Indenture dated as of April 25, 2005, by and
    among the Company, as issuer, its subsidiaries signatories
    thereto, as subsidiary guarantors, and The Bank of New York, a
    New York banking corporation, as trustee, with respect to the
    103/4% Senior
    Notes Due 2010

The Shaw Group Inc. Current Report on Form 8-K filed on May 2,
    2005

1-12227

4.14
.8

Registration Rights Agreement dated as of  March 17, 2003 by and
    among the Company and Credit Suisse First Boston LLC, UBS
    Warburg LLC, BMO Nesbitt Burns Corp., Credit Lyonnais Securities
    (USA) Inc., BNP Paribas Securities Corp. and U.S. Bancorp Piper
    Jaffray Inc.

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2003

1-12227

4.2*10
.1

The Shaw Group Inc. 2001 Employee Incentive Compensation Plan,
    amended and restated through April 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.4 210




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.2

Form of Incentive Stock Option Agreement under The Shaw Group
    Inc. 2001 Employee Incentive Compensation Plan (as amended and
    restated)

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.6*10
.3

Form of Non-Qualified Stock Option Agreement under The Shaw
    Group Inc. 2001 Employee Incentive Compensation Plan (as amended
    and restated)

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.5*10
.4

Form of Restricted Stock Agreement under The Shaw Group Inc.
    2001 Employee Incentive Compensation Plan

The Shaw Group Inc. Current Report on Form 8-K filed on October
    12, 2004

1-12227

10.3*10
.5

The Shaw Group Inc. Stone & Webster Acquisition Stock
    Option Plan

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    June 12, 2001

333-62856

4.6*10
.6

The Shaw Group Inc. 1993 Employee Stock Option Plan amended and
    restated through October 8, 2001

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2001

1-12227

10.1*10
.7

The Shaw Group Inc. 2005 Non-Employee Director Stock Incentive
    Plan, amended and restated through April 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the fiscal year ended May 31, 2006

1-12227

10.7*10
.8

Form of Nonqualified Stock Option Agreement under the 2005
    Non-Employee Director Stock Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on January
    31, 2006

1-12227

10.2*10
.9

Form of Phantom Stock Agreement under the 2005 Non-Employee
    Director Stock Incentive Plan

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.8*10
.10

The Shaw Group Non-Employee Director Compensation Summary*10
.11

Flexible Perquisites Program for certain executive officers

The Shaw Group Inc. Current Report on Form 8-K filed on November
    1, 2004

1-12227

Description
    contained
    under Item
    1.01 of the
    referencedForm 8-K*10
.12

The Shaw Group Inc. 2005 Management Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on March 3,
    2006

1-12227

10.1 211




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.13

Fiscal year 2007 target incentive awards established for
    executive officers of the Company under the 2005 Management
    Incentive Plan

The Shaw Group Inc. Current Report on Form 8-K filed on
    November 2, 2006

1-12227

Description
    contained
    under
    Item 1.01 of the
    referencedForm 8-K*10
.14

Employment Agreement dated as of January 23, 2007, by and
    between the Company and J.M. Bernhard, Jr.

The Shaw Group Inc. Current Report on Form 8-K filed on January
    25, 2007

1-12227

10.1*10
.15

Employment Agreement dated as of May 1, 2000, by and
    between the Company and Robert L. Belk

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2000

1-12227

10.8*10
.16

Amendment to Employment Agreement of Robert L. Belk dated as of
    December 1, 2004

The Shaw Group Inc. Current Report on Form 8-K filed on December
    3, 2004

1-12227

10.1*10
.17

Third Amendment to Employment Agreement of Robert L. Belk dated
    December 31, 2006

The Shaw Group Inc. Quarterly Report Form 10-Q for the quarter
    ended November 30, 2006

1-12227

10.14*10
.18

Fourth Amendment to Employment Agreement of Robert L. Belk dated
    July 6, 2007

The Shaw Group Inc. Current Report on Form 8-K filed
    July 11, 2007

1-12227

10.1*10
.19

Employment Agreement effective as of August 13, 2003, by
    and between the Company and Richard F. Gill*10
.20

Employment Agreement of David L. Chapman, Sr. dated
    April 6, 2002

The Shaw Group Inc. Current Report on Form 8-K filed December
    24, 2003

1-12227

99.1*10
.21

Amendment to Employment Agreement of David L. Chapman, Sr.,
    dated November 29, 2004 (with an effective date of
    April 1, 2005)

The Shaw Group Inc. Current Report on Form 8-K filed on January
    12, 2005

1-12227

10.1*10
.22

Employment Agreement of Dorsey Ron McCall dated July 29,
    2002

The Shaw Group Inc. Current Report on Form 8-K filed on December
    24, 2003



99.3*10
.23

Summary of oral severance agreement with Dirk J. Wild dated
    October 13, 2004

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2004

1-12227

Description 
    contained
    under Item
    5.02 of the
    referenced
    Form 8-K*10
.24

Employment Agreement of Gary P. Graphia dated October 14,
    2005

The Shaw Group Inc. Current Report on Form 8-K filed on October
    14, 2005

1-12227

10.1 212




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.25

First Amendment to Employment Agreement of Gary P. Graphia dated
    as of May 7, 2007

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended May 31, 2007

1-12227

10.3*10
.26

Employment Agreement of David P. Barry effective as of
    March 13, 2006

The Shaw Group Inc. Current Report on Form 8-K filed on March
    14, 2006



10.1*10
.27

Employment Agreement of G. Patrick Thompson effective as of
    July 6, 2006

The Shaw Group Inc. Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006

1-12227

10.3*10
.28

Employment Agreement of Ronald W. Oakley dated effective as of
    August 3, 2006

The Shaw Group Inc. Current Report in Form 8-K filed on August
    4, 2006

1-12227

10.1*10
.29

Employment Agreement and Nondisclosure and Noncompetition
    Agreement, both dated January 15, 2007, by and between the
    Company and Ebrahim Fatemizadeh

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended February 28, 2007

1-12227

10.4*10
.30

Agreement effective as of November 18, 2006 by and between the
    Company and Thomas A. Barfield, Jr.

The Shaw Group Inc. Current Report on Form 8-K filed on February
    2, 2007

1-12227

10.1*10
.31

Employment Agreement dated as of May 7, 2007, and related
    Nondisclosure and Noncompetition Agreement by and between the
    Company and Clifton Scott Rankin

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended May 31, 2007

1-12227

10.4*10
.32

Summary of certain compensation payable to Michael J. Mancuso
    for services as a director of the Company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    16, 2006



Description
    contained
    under Item
    1.01 of the
    referencedForm 8-K*10
.33

Summary of certain compensation payable to Thos E. Capps for
    services as a director of the Company

The Shaw Group Inc. Current Report on Form 8-K/A filed on
    October 5, 2007



Description
    contained
    under Item
    5.02 of the
    referencedForm 8-K*10
.34

Employee Indemnity Agreement dated as of July 12, 2007
    between the Company and Brian K. Ferraioli*10
.35

Employment Agreement effective as of July 17, 2007 between the
    Company and Brian K. Ferraioli

The Shaw Group Inc. Current Report on Form 8-K filed on October
    15, 2007

1-12227

10.1 213




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference*10
.36

The Shaw Group Inc. 401(k) Plan

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    May 4, 2004

333-115155

4.6*10
.37

The Shaw Group Inc. 401(k) Plan for Certain Hourly Employees

The Shaw Group Inc. Registration Statement on Form S-8 filed on
    May 4, 2004

333- 115155

4.6*10
.38

Trust Agreement, dated as of January 2, 2007 by and between the
    Company and Fidelity Management Trust Company for The Shaw Group
    Deferred Compensation Plan Trust

The Shaw Group Inc. Quarterly Report  on
    Form 10-Q
    for the quarter ended February 28, 2007

1-12227

10.610
.39

Asset Purchase Agreement, dated as of July 14, 2000, among Stone
    & Webster, Incorporated, certain subsidiaries of Stone
    & Webster, Incorporated and Company]

The Shaw Group Inc. Current Report on Form 8-K filed on July 28,
    2000

1-12227

2.110
.40

Composite Asset Purchase Agreement, dated as of January 23,
    2002, by and among the Company, The IT Group, Inc. and certain
    subsidiaries of The IT Group, Inc., including the following
    amendments: (i) Amendment No. 1, dated January 24, 2002, to
    Asset Purchase Agreement, (ii) Amendment No. 2, dated January
    29, 2002, to Asset Purchase Agreement, and (iii) a letter
    agreement amending Section 8.04(a)(ii) of the Asset Purchase
    Agreement, dated as of April 30, 2002, between The IT Group,
    Inc. and the Company

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.110
.41

Amendment No. 3, dated May 2, 2002, to Asset Purchase Agreement
    by and among the Company, The IT Group, Inc. and certain
    subsidiaries of The IT Group, Inc.

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.210
.42

Amendment No. 4, dated May 3, 2002, to Asset Purchase Agreement
    by and among the Company, The IT Group, Inc. and certain
    subsidiaries of the IT Group, Inc.

The Shaw Group Inc. Current Report on Form 8-K filed on May 16,
    2002

1-12227

2.3 214




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.43

$450,000,000 Credit Agreement dated as of April 25, 2005, by and
    among the Company, BNP Paribas and The Other Lenders Signatory
    Thereto, BNP Paribas Securities Corp., Bank of Montreal, Credit
    Suisse First Boston, UBS Securities LLC, Regions Bank and
    Merrill Lynch Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on April
    28, 2005

1-12227

10.110
.44

Amendment No. 1 dated as of October 3, 2005, to that certain
    $450,000,000 Credit Agreement dated April 25, 2005, by and among
    the Company, BNP Paribas and The Other Lenders Signatory
    Thereto, BNP Paribas Securities Corp., Bank of Montreal, Credit
    Suisse First Boston, UBS Securities LLC, Regions Bank and
    Merrill Lynch Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on October
    4, 2005

1-12227

10.110
.45

Amendment No. 2 dated as of February 27, 2006, to that certain
    $450,000,000 Credit Agreement dated April 25, 2005, by and among
    the Company, BNP Paribas and The Other Lenders Signatory
    Thereto, BNP Paribas Securities Corp., Bank of Montreal, Credit
    Suisse First Boston, UBS Securities LLC, Regions Bank and
    Merrill Lynch Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Current Report on Form 8-K filed on February
    28, 2006

1-12227

10.110
.46

Amendment No. 3 dated as of June 20, 2006, to that certain
    $450,000,000 Credit Agreement dated April 25, 2005, by and among
    the Company, BNP Paribas and The Other Lenders Signatory
    Thereto, BNP Paribas Securities Corp., Bank of Montreal, Credit
    Suisse First Boston, UBS Securities LLC, Regions Bank and
    Merrill Lynch Pierce, Fenner & Smith, Incorporated

The Shaw Group Inc. Annual Report on Form 10-K for the fiscal
    year ended August 31, 2006

1-12227

10.38 215




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.47

Amendment No. 4 dated as of October 13, 2006, among the Company,
    as borrower; the subsidiaries of the Company signatories
    thereto, as guarantors; BNP Paribas, as administrative agent;
    BNP Paribas Securities Corp., as joint lead arranger and sole
    bookrunner; Bank of Montreal, as joint lead arranger; Credit
    Suisse First Boston, acting through its Cayman branch, as
    co-syndication
    agent; UBS Securities LLC, as
    co-syndication
    agent; and the other lenders signatory thereto

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.110
.48

Waiver dated as of January 18, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated April
    25, 2005, as amended.

The Shaw Group Inc. Current Report on Form 8-K filed on January
    18, 2007

1-12227

10.110
.49

Waiver dated as of March 19, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated April
    25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on March
    19, 2007

1-12227

10.110
.50

Waiver dated as of April 16, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated April
    25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on April
    17, 2007

1-12227

10.110
.51

Waiver dated as of July 16, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated April
    25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on July 16,
    2007

1-12227

10.1 216




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.52

Waiver dated as of August 30, 2007, among the Company, as
    borrower, BNP Paribas, as administrative agent, and the other
    lenders signatory to that certain Credit Agreement dated April
    25, 2005 as amended

The Shaw Group Inc. Current Report on Form 8-K filed on
    September 6, 2007

1-12227

10.110
.53

Put Option Agreement, dated as of October 13, 2006, between NEH
    and Toshiba related to shares in the US acquisition company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.210
.54

Put Option Agreement, dated as of October 13, 2006, between NEH
    and Toshiba related to shares in the UK acquisition company

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.310
.55

Shareholders Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings (US) Inc. the US
    Company, NEH, TSB Nuclear Energy Investment US Inc., a Delaware
    corporation and a wholly owned subsidiary of Toshiba and
    Ishikawajima-Harima Heavy Industries Co., Ltd., a corporation
    organized under the laws of Japan (IHI)

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.410
.56

Shareholders Agreement, dated as of October 4, 2006, by and
    among Toshiba, Toshiba Nuclear Energy Holdings (UK) Inc., the UK
    Company, NEH, IHI and TSB Nuclear Energy Investment UK Limited,
    a company registered in England with registered number 5929658

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.510
.57

Bond Trust Deed, dated October 13, 2006, between NEH and The
    Bank of New York, as trustee

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.610
.58

Parent Pledge Agreement, dated October 13, 2006, between the
    Company and The Bank of New York

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.710
.59

Issuer Pledge Agreement, dated October 13, 2006, between NEH and
    The Bank of New York

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.8 217




---



##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference10
.60

Deed of Charge, dated October 13, 2006, among NEH, The Bank of
    New York, as trustee, and Morgan Stanley Capital Services Inc.,
    as swap counterparty

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.910
.61

Transferable Irrevocable Direct Pay Letter of Credit (Principal
    Letter of Credit) effective October 13, 2006 of Bank of America
    in favor of NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.1010
.62

Transferable Irrevocable Direct Pay Letter of Credit (Interest
    Letter of Credit) effective October 13, 2006 of Bank of America
    in favor of NEH

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.1110
.63

Reimbursement Agreement dated as of October 13, 2006, between
    the Company and Toshiba

The Shaw Group Inc. Current Report on Form 8-K filed on October
    18, 2006

1-12227

10.12*10
.64

Employment Agreement effective as of July 3, 2007, and
    related Nonsolicitation and Noncompete Agreement by and between
    the Company and R. Monty Glover14
.1

The Shaw Group Inc. Code of Corporate Conduct dated June 200614
.2

The Shaw Group Inc. Code of Ethics for Chief Executive Officer
    and Senior Financial Officers (adopted as of December 16, 2003)14
.3

The Shaw Group Inc. Insider Trading Policy dated June 200621
.1

Subsidiaries of The Shaw Group Inc.23
.1

Consent of KPMG LLP, independent registered public accounting
    firm of The Shaw Group Inc.23
.2

Consent of Ernst & Young LLP, former independent
    registered public accounting firm of The Shaw Group Inc. 218




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##### Table of Contents



SEC File or

ExhibitExhibit



Report or Registration

Registration

or OtherNumber

Document Description

Statement

Number

Reference23
.3

Consent of Ernst & Young LLP, independent registered
    public accounting firm of Toshiba Nuclear Energy Holdings (US),
    Inc. and Toshiba Nuclear Energy Holdings (UK) Ltd.31
.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1

Certification pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002  219