##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-11953
 Willbros Group, Inc.
  Republic of Panama
    
    98-0160660(Jurisdiction of incorporation)
    
    (I.R.S. Employer Identification Number)
 Plaza 2000 Building
50th Street, 8th Floor
P.O. Box 0816-01098
Panama, Republic of Panama
Telephone No.: +50-7-213-0947
 
  
 þ o
 o þ o
 o þ




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##### 



WILLBROS GROUP, INC.
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2007
 PagePART I  FINANCIAL INFORMATIONItem 1  Financial StatementsCondensed Consolidated Balance Sheets (Unaudited) as of June 30, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the three months and six months ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statement of Stockholders Equity and Comprehensive Income (Loss) (Unaudited) for the six months ended June 30, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    8Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    37Item 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    50Item 4  Controls and Procedures
    
    
    50PART II  OTHER INFORMATIONItem 1  Legal Proceedings
    
    
    51Item 1A  Risk Factors
    
    
    51Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    51Item 3  Defaults upon Senior Securities
    
    
    51Item 4  Submission of Matters to a Vote of Security Holders
    
    
    52Item 5  Other Information
    
    
    52Item 6  Exhibits
    
    
    52SIGNATURE
    
    
    53EXHIBIT INDEX
    
    
    54Share Purchase AgreementCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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##### Table of Contents



WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    107,762
    
    
    $
    37,643Accounts receivable, net of allowance of $572 and $598
    
    
    101,280
    
    
    
    137,104Contract cost and recognized income not yet billed
    
    
    27,439
    
    
    
    11,027Prepaid expenses
    
    
    12,184
    
    
    
    17,299Parts and supplies inventories
    
    
    2,329
    
    
    
    2,069Other current assets
    
    
    22,434
    
    
    
    Assets of discontinued operations
    
    
    12,738
    
    
    
    294,192Total current assets
    
    
    286,166
    
    
    
    499,334Deferred tax assets
    
    
    10,572
    
    
    
    5,064Property, plant and equipment, net of accumulated depreciation and
amortization of $83,592 and $78,941
    
    
    92,558
    
    
    
    65,347Goodwill
    
    
    7,057
    
    
    
    6,683Other noncurrent assets
    
    
    10,215
    
    
    
    11,826Total assets
    
    $
    406,568
    
    
    $
    588,254LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of long-term debt
    
    $
    13,828
    
    
    $
    5,562Accounts payable and accrued liabilities
    
    
    138,280
    
    
    
    122,352Contract billings in excess of cost and recognized income
    
    
    9,458
    
    
    
    14,947Accrued income taxes
    
    
    4,954
    
    
    
    3,556Liabilities of discontinued operations
    
    
    6,823
    
    
    
    182,092Total current liabilities
    
    
    173,343
    
    
    
    328,5092.75% convertible senior notes
    
    
    70,000
    
    
    
    70,0006.5% senior convertible notes
    
    
    32,050
    
    
    
    84,500Long-term debt
    
    
    25,588
    
    
    
    7,077Long-term liability for unrecognized tax benefits
    
    
    6,798
    
    
    
    Other noncurrent liabilities
    
    
    237
    
    
    
    237Total liabilities
    
    
    308,016
    
    
    
    490,323Contingencies and commitments (Note 11)Stockholders equity:Class A preferred stock, par value $.01 per share,
1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, par value $.05 per share, 70,000,000 shares
authorized; 29,234,588 shares issued (25,848,596 at
December 31, 2006)
    
    
    1,461
    
    
    
    1,292Capital in excess of par value
    
    
    271,841
    
    
    
    217,036Accumulated deficit
    
    
    (183,058
    )
    
    
    (120,603
    )Treasury stock at cost, 203,610 shares (167,844 at
December 31, 2006)
    
    
    (2,651
    )
    
    
    (2,154
    )Accumulated other comprehensive income
    
    
    10,959
    
    
    
    2,360Total stockholders equity
    
    
    98,552
    
    
    
    97,931Total liabilities and stockholders equity
    
    $
    406,568
    
    
    $
    588,254
  3




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##### Table of Contents



WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Contract revenue
    
    $
    156,743
    
    
    $
    119,128
    
    
    $
    363,452
    
    
    $
    226,715Operating expenses:Contract
    
    
    137,869
    
    
    
    105,747
    
    
    
    331,701
    
    
    
    207,210Depreciation and amortization
    
    
    4,310
    
    
    
    2,924
    
    
    
    7,766
    
    
    
    5,915General and administrative
    
    
    13,422
    
    
    
    11,636
    
    
    
    24,847
    
    
    
    22,041Government fines and penalties
    
    
    24,000
    
    
    
    
    
    
    
    24,000
    
    
    
    179,601
    
    
    
    120,307
    
    
    
    388,314
    
    
    
    235,166Operating loss
    
    
    (22,858
    )
    
    
    (1,179
    )
    
    
    (24,862
    )
    
    
    (8,451
    )Other income (expense):Interest income
    
    
    1,840
    
    
    
    528
    
    
    
    3,404
    
    
    
    1,012Interest expense
    
    
    (2,027
    )
    
    
    (2,315
    )
    
    
    (4,481
    )
    
    
    (4,435
    )Other  net
    
    
    (502
    )
    
    
    (452
    )
    
    
    (692
    )
    
    
    (327
    )Loss on early extinguishment of debt
    
    
    (15,375
    )
    
    
    
    
    
    
    (15,375
    )
    
    
    (16,064
    )
    
    
    (2,239
    )
    
    
    (17,144
    )
    
    
    (3,750
    )Loss from continuing operations
before income taxes
    
    
    (38,922
    )
    
    
    (3,418
    )
    
    
    (42,006
    )
    
    
    (12,201
    )Provision for income taxes
    
    
    1,457
    
    
    
    1,686
    
    
    
    1,712
    
    
    
    1,432Net loss from continuing operations
    
    
    (40,379
    )
    
    
    (5,104
    )
    
    
    (43,718
    )
    
    
    (13,633
    )Loss from discontinued operations
net of provision for income taxes
    
    
    (3,860
    )
    
    
    (33,048
    )
    
    
    (12,368
    )
    
    
    (29,113
    )Net loss
    
    $
    (44,239
    )
    
    $
    (38,152
    )
    
    $
    (56,086
    )
    
    $
    (42,746
    )Basic loss per common share:Loss from continuing operations
    
    $
    (1.47
    )
    
    $
    (0.24
    )
    
    $
    (1.65
    )
    
    $
    (0.63
    )Loss from discontinued operations
    
    
    (0.14
    )
    
    
    (1.53
    )
    
    
    (0.47
    )
    
    
    (1.36
    )Net loss
    
    $
    (1.61
    )
    
    $
    (1.77
    )
    
    $
    (2.12
    )
    
    $
    (1.99
    )Diluted loss per common share:Loss from continuing operations
    
    $
    (1.47
    )
    
    $
    (0.24
    )
    
    $
    (1.65
    )
    
    $
    (0.63
    )Loss from discontinued operations
    
    
    (0.14
    )
    
    
    (1.53
    )
    
    
    (0.47
    )
    
    
    (1.36
    )Net loss
    
    $
    (1.61
    )
    
    $
    (1.77
    )
    
    $
    (2.12
    )
    
    $
    (1.99
    )Weighted average number of common
shares outstanding:Basic
    
    
    27,515,593
    
    
    
    21,538,964
    
    
    
    26,505,438
    
    
    
    21,442,247Diluted
    
    
    27,515,593
    
    
    
    21,538,964
    
    
    
    26,505,438
    
    
    
    21,442,247
  4




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##### Table of Contents



WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AND COMPREHENSIVE
INCOME (LOSS)
 (In thousands, except share and per share amounts)
 (Unaudited)
 Capital in
    
    
    
    
    
    
    
    
    
    
    AccumulatedExcess of
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Par
    
    
    Accumulated
    
    
    Treasury
    
    
    Comprehensive
    
    
    Stockholders'Shares
    
    
    Par Value
    
    
    Value
    
    
    Deficit
    
    
    Stock
    
    
    Income
    
    
    EquityBalance,
January 1, 2007
    
    
    25,848,596
    
    
    $
    1,292
    
    
    $
    217,036
    
    
    $
    (120,603
    )
    
    $
    (2,154
    )
    
    $
    2,360
    
    
    $
    97,931Cumulative effect of
adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,369
    )
    
    
    
    
    
    
    
    
    
    
    (6,369
    )Balance January 1, 2007,
as adjusted
    
    
    25,848,596
    
    
    
    1,292
    
    
    
    217,036
    
    
    
    (126,972
    )
    
    
    (2,154
    )
    
    
    2,360
    
    
    
    91,562Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,086
    )
    
    
    
    
    
    
    
    
    
    
    (56,086
    )Realization of loss on
sale of Nigeria assets and operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,773
    (1)
    
    
    3,773Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,826
    
    
    
    4,826Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,487
    )Deferred compensation
    
    
    
    
    
    
    
    
    
    
    1,922
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,922Restricted stock grants
    
    
    345,577
    
    
    
    17
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vesting of restricted
stock rights
    
    
    9,583
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additions to treasury stock,
vesting restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (497
    )
    
    
    
    
    
    
    (497
    )Exercise of stock options
    
    
    43,250
    
    
    
    2
    
    
    
    631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633Stock issued on conversions
of 6.5% senior convertible
notes
    
    
    2,987,582
    
    
    
    149
    
    
    
    52,301
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,450Additional cost of private
placement
    
    
    
    
    
    
    
    
    
    
    (31
    )(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )Balance, June 30, 2007
    
    
    29,234,588
    
    
    $
    1,461
    
    
    $
    271,841
    
    
    $
    (183,058
    )
    
    $
    (2,651
    )
    
    $
    10,959
    
    
    $
    98,552
 
 (1)
    
    Removal of previously recorded foreign currency translation adjustments
associated with the Companys Nigeria operations.(2)
    
    Private placement completed October 26, 2006.  5




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WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands, except share and per share amounts)
 (Unaudited)
 Six MonthsEnded June 30,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (56,086
    )
    
    $
    (42,746
    )Reconciliation of net loss to net cash provided by
(used in) operating activities:Loss from discontinued operations
    
    
    12,368
    
    
    
    29,113Depreciation and amortization
    
    
    7,766
    
    
    
    5,915Amortization of debt issue costs
    
    
    1,007
    
    
    
    737Amortization of deferred compensation
    
    
    1,922
    
    
    
    1,868Amortization of discount on notes receivable for stock
purchases
    
    
    
    
    
    
    (8
    )Loss on early extinguishment of debt
    
    
    15,375
    
    
    
    Gain on sales of property, plant and equipment
    
    
    (847
    )
    
    
    (67
    )Provision for bad debts
    
    
    42
    
    
    
    146Deferred income tax provision
    
    
    (5,511
    )
    
    
    (1,396
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    36,312
    
    
    
    (2,554
    )Contract cost and recognized income not yet billed
    
    
    (16,068
    )
    
    
    (4,039
    )Prepaid expenses
    
    
    15,252
    
    
    
    3,514Parts and supplies inventories
    
    
    (260
    )
    
    
    436Other noncurrent assets
    
    
    (1,408
    )
    
    
    204Accounts payable and accrued liabilities
    
    
    80
    
    
    
    (2,449
    )Accrued income taxes
    
    
    1,127
    
    
    
    251Long-term liability for unrecognized tax benefits
    
    
    429
    
    
    
    Contract billings in excess of cost and recognized income
    
    
    (5,494
    )
    
    
    649Cash provided by (used in) operating activities of
continuing operations
    
    
    6,006
    
    
    
    (10,426
    )Cash used in operating activities of discontinued
operations
    
    
    (16,219
    )
    
    
    (41,866
    )Cash used in operating activities
    
    
    (10,213
    )
    
    
    (52,292
    )Cash flows from investing activities:Proceeds from the sale of discontinued operations, net
    
    
    130,568
    
    
    
    25,082Proceeds from sales of property, plant and equipment
    
    
    1,428
    
    
    
    1,226Deposit for acquisition
    
    
    (21,181
    )
    
    
    Purchases of property, plant and equipment
    
    
    (7,938
    )
    
    
    (4,996
    )Cash provided by investing activities of
continuing operations
    
    
    102,877
    
    
    
    21,312Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (4,000
    )Cash provided by investing activities
    
    
    102,877
    
    
    
    17,312Cash flows from financing activities:Proceeds from issuance of 6.5% senior convertible notes
    
    
    
    
    
    
    19,500Loss on early extinguishment of debt
    
    
    (12,993
    )
    
    
    Proceeds from issuance of common stock, net
    
    
    602
    
    
    
    2,226Repayment of notes payable
    
    
    (6,020
    )
    
    
    (5,950
    )Costs of debt issues
    
    
    (286
    )
    
    
    (3,776
    )Acquisition of treasury stock
    
    
    (497
    )
    
    
    (428
    )Repayments of long-term debt
    
    
    
    
    
    
    (230
    )Payments on capital leases
    
    
    (2,898
    )
    
    
    (161
    )Cash provided by (used in) financing activities of
continuing operations
    
    
    (22,092
    )
    
    
    11,181Cash provided by financing activities of
discontinued operations
    
    
    
    
    
    
    
 6




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WILLBROS GROUP, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands, except share and per share amounts)
(Unaudited)
 Six MonthsEnded June 30,2007
    
    
    2006Cash provided by (used in) financing activities
    
    
    (22,092
    )
    
    
    11,181Effect of exchange rate changes on cash and cash equivalents
    
    $
    (453
    )
    
    $
    (118
    )Cash provided by (used in) all activities
    
    
    70,119
    
    
    
    (23,917
    )Cash and cash equivalents, beginning of period
    
    
    37,643
    
    
    
    55,933Cash and cash equivalents, end of period
    
    $
    107,762
    
    
    $
    32,016Supplemental disclosures of cash flow information:Cash paid for interest (including discontinued operations)
    
    $
    4,038
    
    
    $
    3,620Cash paid for income taxes (including discontinued operations)
    
    $
    5,782
    
    
    $
    7,259Supplemental non-cash investing and financing transactions (all related to
continuing operations):Prepaid insurance obtained by note payable
    
    $
    10,051
    
    
    $
    9,385Note receivable obtained by sale of discontinued operations
    
    $
    2,625
    
    
    $
    Equipment obtained by capital leases
    
    $
    25,125
    
    
    $
    1,446
  7




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WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 1. Basis of Presentation
          8




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WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 2. New Accounting Pronouncements
 SFAS No. 157
  SFAS No. 159
  FIN 48
    Effect of adopting FIN 48 at January 1, 2007
    
    $
    6,369Income tax liabilities recognized prior to adoption of FIN 48
    
    
    158Additions based on tax positions related to the current year
    
    
    48Additions for tax positions of prior years
    
    
    223Balance at June 30, 2007
    
    $
    6,798
  3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement
 Strategic Decisions
  9




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WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
  Nigeria
 Business Disposal
     Transition Services Agreement (TSA)
  10




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WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
       Venezuela
 Business Disposal
  TXP-4 Plant
 Asset Disposal
   11




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WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
 Results of Discontinued Operations
  Three Months Ended June 30, 2007DiscontinuedNigeria
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    
    
    
    $
    10,719
    
    
    $
    
    
    
    $
    
    
    
    $
    10,719Operating expenses:Contract
    
    
    
    
    
    
    9,973
    
    
    
    
    
    
    
    
    
    
    
    9,973Depreciation and amortization
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    312General and administrative
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    346
    
    
    
    10,631
    
    
    
    
    
    
    
    
    
    
    
    10,631Operating income
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    88Other income
(expense)
    
    
    (3,603
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (3,602
    )Income before income taxes
    
    
    (3,603
    )
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    (3,514
    )Provision for income taxes
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    346Net loss
    
    $
    (3,603
    )
    
    $
    (257
    )
    
    $
    
    
    
    $
    
    
    
    $
    (3,860
    )
 Three Months Ended June 30, 2006DiscontinuedNigeria
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    132,143
    
    
    $
    
    
    
    $
    132
    
    
    $
    
    
    
    $
    132,275Operating expenses:Contract
    
    
    134,748
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    134,836Depreciation and amortization
    
    
    1,658
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    1,803General and administrative
    
    
    7,993
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    8,185144,399
    
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    144,824Operating loss
    
    
    (12,256
    )
    
    
    
    
    
    
    (293
    )
    
    
    
    
    
    
    (12,549
    )Other income (expense)
    
    
    (14,723
    )
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    (14,644
    )Loss before income taxes
    
    
    (26,979
    )
    
    
    
    
    
    
    (214
    )
    
    
    
    
    
    
    (27,193
    )Provision for income taxes
    
    
    5,720
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    5,855Net loss
    
    $
    (32,699
    )
    
    $
    
    
    
    $
    (349
    )
    
    $
    
    
    
    $
    (33,048
    )
 12




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
 Six Months Ended June 30, 2007DiscontinuedNigeria(1)
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    30,046
    
    
    $
    17,081
    
    
    $
    
    
    
    $
    
    
    
    $
    47,127Operating expenses:Contract
    
    
    34,360
    
    
    
    15,837
    
    
    
    
    
    
    
    
    
    
    
    50,197Depreciation and amortization
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    312General and administrative
    
    
    3,472
    
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    3,91337,832
    
    
    
    16,590
    
    
    
    
    
    
    
    
    
    
    
    54,422Operating income (loss)
    
    
    (7,786
    )
    
    
    491
    
    
    
    
    
    
    
    
    
    
    
    (7,295
    )Other income
(expense)
    
    
    (3,387
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (3,386
    )Income (loss) before income taxes
    
    
    (11,173
    )
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    (10,681
    )Provision for income taxes
    
    
    1,092
    
    
    
    595
    
    
    
    
    
    
    
    
    
    
    
    1,687Net loss
    
    $
    (12,265
    )
    
    $
    (103
    )
    
    $
    
    
    
    $
    
    
    
    $
    (12,368
    )
 (1)
 Six Months Ended June 30, 2006DiscontinuedNigeria
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    272,971
    
    
    $
    
    
    
    $
    214
    
    
    $
    
    
    
    $
    273,185Operating expenses:Contract
    
    
    260,054
    
    
    
    
    
    
    
    448
    
    
    
    
    
    
    
    260,502Depreciation and amortization
    
    
    3,608
    
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    3,986General and administrative
    
    
    13,155
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    13,431276,817
    
    
    
    
    
    
    
    1,102
    
    
    
    
    
    
    
    277,919Operating loss
    
    
    (3,846
    )
    
    
    
    
    
    
    (888
    )
    
    
    
    
    
    
    (4,734
    )Other income (expense)
    
    
    (14,500
    )
    
    
    
    
    
    
    165
    
    
    
    2,033
    
    
    
    (12,302
    )Income (loss) before income taxes
    
    
    (18,346
    )
    
    
    
    
    
    
    (723
    )
    
    
    2,033
    
    
    
    (17,036
    )Provision for income taxes
    
    
    11,243
    
    
    
    
    
    
    
    143
    
    
    
    691
    
    
    
    12,077Net income (loss)
    
    $
    (29,589
    )
    
    $
    
    
    
    $
    (866
    )
    
    $
    1,342
    
    
    $
    (29,113
    )
 13




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
 Financial Position of Discontinued Operations
  June 30, 2007DiscontinuedNigeria
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    126
    
    
    $
    
    
    
    $
    
    
    
    $
    126Accounts receivable, net
    
    
    
    
    
    
    9,109
    
    
    
    
    
    
    
    
    
    
    
    9,109Prepaid expenses
    
    
    
    
    
    
    1,704
    
    
    
    
    
    
    
    
    
    
    
    1,704Total current assets
    
    
    
    
    
    
    10,939
    
    
    
    
    
    
    
    
    
    
    
    10,939Property, plant and equipment, net
    
    
    
    
    
    
    1,241
    
    
    
    
    
    
    
    
    
    
    
    1,241Other noncurrent assets
    
    
    
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    558Total assets
    
    
    
    
    
    
    12,738
    
    
    
    
    
    
    
    
    
    
    
    12,738Current liabilities
    
    
    
    
    
    
    6,823
    
    
    
    
    
    
    
    
    
    
    
    6,823Total current liabilities
    
    
    
    
    
    
    6,823
    
    
    
    
    
    
    
    
    
    
    
    6,823Net assets of discontinued operations
    
    $
    
    
    
    $
    5,915
    
    
    $
    
    
    
    $
    
    
    
    $
    5,915
 December 31, 2006DiscontinuedNigeria
    
    
    Nigeria TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsCurrent assets:Cash and cash equivalents
    
    $
    12,964
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,964Restricted cash
    
    
    36,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,683Accounts receivable, net
    
    
    76,673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,673Contract cost and recognized income not
yet billed
    
    
    79,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,364Prepaid expenses
    
    
    16,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,017Parts and supplies inventories
    
    
    21,645
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,645Total current assets
    
    
    243,346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    243,346Property, plant and equipment, net
    
    
    50,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,723Other noncurrent assets
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123Total assets
    
    
    294,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    294,192Current liabilities
    
    
    148,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,135Loss provision on contracts
    
    
    33,957
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,957Total current liabilities
    
    
    182,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,092Net assets of discontinued operations
    
    $
    112,100
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    112,100
 14




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement (continued)
 Cash and Cash Equivalents
  Parts and Supplies Inventories
  Loss Provision on Contracts
  Contingencies, Commitments and Other Circumstances
  4. Contracts in Progress
   June 30,
    
    
    December 31,2007
    
    
    2006Contract cost and recognized income not yet billed
    
    $
    27,439
    
    
    $
    11,027Contract billings in excess of cost and recognized income
    
    
    (9,458
    )
    
    
    (14,947
    )$
    17,981
    
    
    $
    (3,920
    )
  15




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 5. Long-term Debt
  June 30,
    
    
    December 31,2007
    
    
    20062.75% convertible senior notes
    
    $
    70,000
    
    
    $
    70,000Capital lease obligations
    
    
    34,248
    
    
    
    11,6016.5% senior convertible notes
    
    
    32,050
    
    
    
    84,500Other obligations
    
    
    122
    
    
    
    512006 Credit Facility
    
    
    
    
    
    
    Total debt
    
    
    136,420
    
    
    
    166,152Less current portion
    
    
    (8,782
    )
    
    
    (4,575
    )Long-term debt
    
    $
    127,638
    
    
    $
    161,577
 2006 Credit Facility
   16




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 5. Long -term Debt (continued)
    6.5% Senior Convertible Notes
      17




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 5. Long-term Debt (continued)
    2.75% Convertible Senior Notes
   18




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 5. Long-term Debt (continued)
  2004 Credit Facility
   Capital Leases
   June 30,
    
    
    December 31,2007
    
    
    2006Construction equipment
    
    $
    35,787
    
    
    $
    10,662Land and buildings
    
    
    
    
    
    
    1,446Furniture and office equipment
    
    
    535
    
    
    
    535Total assets held under capital lease
    
    
    36,322
    
    
    
    12,643Less accumulated amortization
    
    
    (3,717
    )
    
    
    (1,572
    )Net assets under capital lease
    
    $
    32,605
    
    
    $
    11,071
 19




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 6. Loss Per Share
   Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net loss from continuing operations applicable
to common shares
    
    $
    (40,379
    )
    
    $
    (5,104
    )
    
    $
    (43,718
    )
    
    $
    (13,633
    )Weighted average number of common
shares outstanding for basic loss per share
    
    
    27,515,593
    
    
    
    21,538,964
    
    
    
    26,505,438
    
    
    
    21,442,247Weighted average number of dilutive potential
common shares outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average number of common
shares outstanding for diluted loss per share
    
    
    27,515,593
    
    
    
    21,538,964
    
    
    
    26,505,438
    
    
    
    21,442,247Loss per common share from continuing operations:Basic
    
    $
    (1.47
    )
    
    $
    (0.24
    )
    
    $
    (1.65
    )
    
    $
    (0.63
    )Diluted
    
    $
    (1.47
    )
    
    $
    (0.24
    )
    
    $
    (1.65
    )
    
    $
    (0.63
    )
  Three and Six MonthsEnded June 30,2007
    
    20062.75% Convertible senior notes
    
    
    3,595,277
    
    
    
    3,595,2776.5% Senior convertible notes
    
    
    1,825,589
    
    
    
    4,813,171Stock options
    
    
    741,000
    
    
    
    792,900Warrants to purchase common stock
    
    
    558,354
    
    
    
    Restricted stock
    
    
    514,815
    
    
    
    238,0007,235,035
    
    
    
    9,439,348
  20




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 7. Segment Information
 Construction Engineering, Engineering, Procurement and Construction EPC). US & Canada International
   Construction
    
    
    Engineering
    
    
    EPC
    
    
    Corporate
    
    
    ConsolidatedContract revenue
    
    $
    111,949
    
    
    $
    20,801
    
    
    $
    23,993
    
    
    $
    
    
    
    $
    156,743Operating expenses:Contract
    
    
    99,558
    
    
    
    14,543
    
    
    
    23,768
    
    
    
    
    
    
    
    137,869Depreciation and amortization
    
    
    3,790
    
    
    
    190
    
    
    
    330
    
    
    
    
    
    
    
    4,310General and administrative
    
    
    9,696
    
    
    
    2,251
    
    
    
    1,475
    
    
    
    
    
    
    
    13,422Government fines and penalties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    
    
    
    24,000113,044
    
    
    
    16,984
    
    
    
    25,573
    
    
    
    24,000
    
    
    
    179,601Operating income (loss):
    
    $
    (1,095
    )
    
    $
    3,817
    
    
    $
    (1,580
    )
    
    $
    (24,000
    )
    
    
    (22,858
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,064
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,457Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,379
    )Net loss from discontinued operations,
net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,860
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (44,239
    )
  Construction
    
    
    Engineering
    
    
    EPC
    
    
    Corporate
    
    
    ConsolidatedContract revenue
    
    $
    87,235
    
    
    $
    19,924
    
    
    $
    11,969
    
    
    $
    
    
    
    $
    119,128Operating expenses:Contract
    
    
    78,551
    
    
    
    15,734
    
    
    
    11,462
    
    
    
    
    
    
    
    105,747Depreciation and amortization
    
    
    2,033
    
    
    
    210
    
    
    
    681
    
    
    
    
    
    
    
    2,924General and administrative
    
    
    8,855
    
    
    
    2,343
    
    
    
    438
    
    
    
    
    
    
    
    11,63689,439
    
    
    
    18,287
    
    
    
    12,581
    
    
    
    
    
    
    
    120,307Operating income (loss):
    
    $
    (2,204
    )
    
    $
    1,637
    
    
    $
    (612
    )
    
    $
    
    
    
    
    (1,179
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,239
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,686Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,104
    )Net loss from discontinued operations,
net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,048
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (38,152
    )
 21




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 7. Segment Information (continued)
  Construction
    
    
    Engineering
    
    
    EPC
    
    
    Corporate
    
    
    ConsolidatedContract revenue
    
    $
    282,654
    
    
    $
    40,456
    
    
    $
    40,342
    
    
    $
    
    
    
    $
    363,452Operating expenses:Contract
    
    
    264,562
    
    
    
    30,132
    
    
    
    37,007
    
    
    
    
    
    
    
    331,701Depreciation and amortization
    
    
    6,633
    
    
    
    341
    
    
    
    792
    
    
    
    
    
    
    
    7,766General and administrative
    
    
    18,867
    
    
    
    3,714
    
    
    
    2,266
    
    
    
    
    
    
    
    24,847Government fines and penalties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    
    
    
    24,000290,062
    
    
    
    34,187
    
    
    
    40,065
    
    
    
    24,000
    
    
    
    388,314Operating income (loss):
    
    $
    (7,408
    )
    
    $
    6,269
    
    
    $
    277
    
    
    $
    (24,000
    )
    
    
    (24,862
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,144
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,712Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,718
    )Net loss from discontinued operations,
net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,368
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (56,086
    )
  Construction
    
    
    Engineering
    
    
    EPC
    
    
    Corporate
    
    
    ConsolidatedContract revenue
    
    $
    166,383
    
    
    $
    35,405
    
    
    $
    24,927
    
    
    $
    
    
    
    $
    226,715Operating expenses:Contract
    
    
    155,260
    
    
    
    29,306
    
    
    
    22,644
    
    
    
    
    
    
    
    207,210Depreciation and amortization
    
    
    4,125
    
    
    
    442
    
    
    
    1,348
    
    
    
    
    
    
    
    5,915General and administrative
    
    
    16,911
    
    
    
    4,246
    
    
    
    884
    
    
    
    
    
    
    
    22,041176,296
    
    
    
    33,994
    
    
    
    24,876
    
    
    
    
    
    
    
    235,166Operating income (loss):
    
    $
    (9,913
    )
    
    $
    1,411
    
    
    $
    51
    
    
    $
    
    
    
    
    (8,451
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,750
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,432Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,633
    )Net loss from discontinued operations,
net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,113
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (42,746
    )
 22




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 7. Segment Information (continued)
  June 30,
    
    
    December 31,2007
    
    
    2006Construction
    
    $
    223,507
    
    
    $
    196,166Engineering
    
    
    14,878
    
    
    
    15,346EPC
    
    
    20,655
    
    
    
    15,170Corporate
    
    
    134,790
    
    
    
    67,380Total segment assets
    
    $
    393,830
    
    
    $
    294,062
 8. Stockholders Equity
  Stock Ownership Plans
     23




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 8. Stockholders Equity (continued)
   Six Months EndedJune 30,2006Weighted average grant date fair value
    
    $
    6.69Weighted average assumptions used:Expected volatility
    
    
    45.10
    %Expected lives
    
    3.46 yrsRisk-free interest rates
    
    
    4.30
    %Expected dividend yield
    
    
    0.00
    %
   Weighted AverageNumber of Options
    
    
    Exercise PriceOutstanding at January 1, 2007
    
    
    806,750
    
    
    $
    13.46Granted
    
    
    
    
    
    
    Exercised
    
    
    43,250
    
    
    
    14.59Forfeited
    
    
    22,500
    
    
    
    8.09Outstanding at June 30, 2007
    
    
    741,000
    
    
    $
    13.55Exercisable at June 30, 2007
    
    
    564,333
    
    
    $
    12.33
   24




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 8. Stockholders Equity (continued)
  WeightedAverageGrant-DateShares
    
    
    Fair ValueNonvested, January 1, 2007
    
    
    202,500
    
    
    $
    6.40Granted
    
    
    
    
    
    
    Vested
    
    
    25,833
    
    
    
    5.47Forfeited or expired
    
    
    
    
    
    
    Nonvested, June 30, 2007
    
    
    176,667
    
    
    $
    6.53
  WeightedAverageNumber of
    
    
    Grant-DateRSU's
    
    
    Fair ValueOutstanding at January 1, 2007
    
    
    300,116
    
    
    $
    17.85Granted
    
    
    392,485
    
    
    
    21.15Vested
    
    
    104,836
    
    
    
    17.59Forfeited
    
    
    9,750
    
    
    
    19.74Outstanding June 30, 2007
    
    
    578,015
    
    
    $
    20.11
   Warrants to Purchase Common Stock
  Induced
Conversion of 6.5% Notes
  25




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 9. Income Taxes
   10. Foreign Exchange Risk
  11 Contingencies, Commitments and Other Circumstances
 Government
Investigations
    26




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 11 Contingencies, Commitments and Other Circumstances (continued)
  Government
Fines and Penalties
   Class-action
Lawsuit
  Other
Circumstances
   27




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 11 Contingencies, Commitments and Other Circumstances (continued)
   /
 Commitments
  st
   28




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 11. Contingencies, Commitments and Other Circumstances (continued)
     12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements
   29




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##### Table of Contents



WILLBROS GROUP, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share and per share amounts)
 (Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 June 30, 2007 and December 31, 2006
 Willbros Group, Inc. and Subsidiaries
 
 Condensed Consolidating Balance Sheets
 
 June 30, 2007Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    57,540
    
    
    $
    15,064
    
    
    $
    35,158
    
    
    $
    
    
    
    $
    107,762Accounts receivable, net
    
    
    2,665
    
    
    
    46,760
    
    
    
    51,855
    
    
    
    
    
    
    
    101,280Contract cost and recognized income not yet
billed
    
    
    
    
    
    
    13,094
    
    
    
    14,345
    
    
    
    
    
    
    
    27,439Prepaid expenses
    
    
    7
    
    
    
    11,378
    
    
    
    799
    
    
    
    
    
    
    
    12,184Parts and supplies inventories
    
    
    
    
    
    
    560
    
    
    
    1,769
    
    
    
    
    
    
    
    2,329Other current assets
    
    
    
    
    
    
    
    
    
    
    22,434
    
    
    
    
    
    
    
    22,434Assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    12,738
    
    
    
    
    
    
    
    12,738Receivables from affiliated companies
    
    
    267,195
    
    
    
    
    
    
    
    
    
    
    
    (267,195
    )
    
    
    Total current assets
    
    
    327,407
    
    
    
    86,856
    
    
    
    139,098
    
    
    
    (267,195
    )
    
    
    286,166Deferred tax assets
    
    
    
    
    
    
    10,608
    
    
    
    (36
    )
    
    
    
    
    
    
    10,572Property, plant and equipment, net
    
    
    
    
    
    
    53,423
    
    
    
    39,135
    
    
    
    
    
    
    
    92,558Investment in subsidiaries
    
    
    (78,359
    )
    
    
    
    
    
    
    
    
    
    
    78,359
    
    
    
    Other noncurrent assets
    
    
    3,328
    
    
    
    10,441
    
    
    
    3,503
    
    
    
    
    
    
    
    17,272Total assets
    
    $
    252,376
    
    
    $
    161,328
    
    
    $
    181,700
    
    
    $
    (188,836
    )
    
    $
    406,568LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of long-
term debt
    
    $
    
    
    
    $
    12,079
    
    
    $
    1,749
    
    
    $
    
    
    
    $
    13,828Accounts payable and accrued liabilities
    
    
    51,774
    
    
    
    41,583
    
    
    
    44,923
    
    
    
    
    
    
    
    138,280Contract billings in excess of cost and
recognized income
    
    
    
    
    
    
    9,458
    
    
    
    
    
    
    
    
    
    
    
    9,458Accrued income taxes
    
    
    
    
    
    
    1,001
    
    
    
    3,953
    
    
    
    
    
    
    
    4,954Liabilities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    11,885
    
    
    
    (5,062
    )
    
    
    6,823Payables to affiliated companies
    
    
    
    
    
    
    46,728
    
    
    
    215,405
    
    
    
    (262,133
    )
    
    
    Total current liabilities
    
    
    51,744
    
    
    
    110,849
    
    
    
    277,915
    
    
    
    (267,195
    )
    
    
    173,343Long-term debt
    
    
    102,050
    
    
    
    21,722
    
    
    
    3,866
    
    
    
    
    
    
    
    127,638Long-term liability for unrecognized tax benefits
    
    
    
    
    
    
    2,899
    
    
    
    3,899
    
    
    
    
    
    
    
    6,798Other liabilities
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    
    
    
    
    237Total liabilities
    
    
    153,824
    
    
    
    135,470
    
    
    
    285,917
    
    
    
    (267,195
    )
    
    
    308,016Stockholders equity:Common stock
    
    
    1,461
    
    
    
    8
    
    
    
    32
    
    
    
    (40
    )
    
    
    1,461Capital in excess of par value
    
    
    271,841
    
    
    
    89,156
    
    
    
    8,526
    
    
    
    (97,682
    )
    
    
    271,841Accumulated deficit
    
    
    (183,058
    )
    
    
    (63,306
    )
    
    
    (120,661
    )
    
    
    183,967
    
    
    
    (183,058
    )Other stockholders equity components
    
    
    8,308
    
    
    
    
    
    
    
    7,886
    
    
    
    (7,886
    )
    
    
    8,308Total stockholders equity
    
    
    98,552
    
    
    
    25,858
    
    
    
    (104,217
    )
    
    
    78,359
    
    
    
    98,552Total liabilities and stockholders equity
    
    $
    252,376
    
    
    $
    161,328
    
    
    $
    181,700
    
    
    $
    (188,836
    )
    
    $
    406,568
 30




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##### Table of Contents



WILLBROS GROUP, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share and per share amounts)
 (Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 
 Condensed Consolidating Balance Sheets
 
 December 31, 2006Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,776
    
    
    $
    4,895
    
    
    $
    7,972
    
    
    $
    
    
    
    $
    37,643Accounts receivable, net
    
    
    32
    
    
    
    81,004
    
    
    
    56,068
    
    
    
    
    
    
    
    137,104Contract cost and recognized income not yet
billed
    
    
    
    
    
    
    2,225
    
    
    
    8,802
    
    
    
    
    
    
    
    11,027Prepaid expenses
    
    
    3
    
    
    
    16,092
    
    
    
    1,204
    
    
    
    
    
    
    
    17,299Parts and supplies inventories
    
    
    
    
    
    
    560
    
    
    
    1,509
    
    
    
    
    
    
    
    2,069Assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    294,192
    
    
    
    
    
    
    
    294,192Receivables from affiliated companies
    
    
    280,853
    
    
    
    
    
    
    
    
    
    
    
    (280,853
    )
    
    
    Total current assets
    
    
    305,664
    
    
    
    104,776
    
    
    
    369,747
    
    
    
    (280,853
    )
    
    
    499,334Deferred tax assets
    
    
    
    
    
    
    5,144
    
    
    
    (80
    )
    
    
    
    
    
    
    5,064Property, plant and equipment, net
    
    
    
    
    
    
    33,115
    
    
    
    32,232
    
    
    
    
    
    
    
    65,347Investment in subsidiaries
    
    
    (42,228
    )
    
    
    
    
    
    
    
    
    
    
    42,228
    
    
    
    Other noncurrent assets
    
    
    6,344
    
    
    
    5,007
    
    
    
    7,158
    
    
    
    
    
    
    
    18,509Total assets
    
    $
    269,780
    
    
    $
    148,042
    
    
    $
    409,057
    
    
    $
    (238,625
    )
    
    $
    588,254LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of
long-term debt
    
    $
    
    
    
    $
    4,382
    
    
    $
    1,180
    
    
    $
    
    
    
    $
    5,562Accounts payable and accrued liabilities
    
    
    17,349
    
    
    
    63,120
    
    
    
    41,883
    
    
    
    
    
    
    
    122,352Contract billings in excess of cost and
recognized income
    
    
    
    
    
    
    14,779
    
    
    
    168
    
    
    
    
    
    
    
    14,947Accrued income taxes
    
    
    
    
    
    
    1,657
    
    
    
    1,899
    
    
    
    
    
    
    
    3,556Liabilities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    353,980
    
    
    
    (171,888
    )
    
    
    182,092Payables to affiliated companies
    
    
    
    
    
    
    22,923
    
    
    
    86,042
    
    
    
    (108,965
    )
    
    
    Total current liabilities
    
    
    17,349
    
    
    
    106,861
    
    
    
    485,152
    
    
    
    (280,853
    )
    
    
    328,509Long-term debt
    
    
    154,500
    
    
    
    7,077
    
    
    
    
    
    
    
    
    
    
    
    161,577Other noncurrent liabilities
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    
    
    
    
    237Total liabilities
    
    
    171,849
    
    
    
    113,938
    
    
    
    485,389
    
    
    
    (280,853
    )
    
    
    490,323Stockholders equity:Common stock
    
    
    1,292
    
    
    
    8
    
    
    
    32
    
    
    
    (40
    )
    
    
    1,292Capital in excess of par value
    
    
    217,036
    
    
    
    89,156
    
    
    
    8,526
    
    
    
    (97,682
    )
    
    
    217,036Accumulated deficit
    
    
    (120,603
    )
    
    
    (55,060
    )
    
    
    (84,177
    )
    
    
    139,237
    
    
    
    (120,603
    )Other stockholders equity components
    
    
    206
    
    
    
    
    
    
    
    (713
    )
    
    
    713
    
    
    
    206Total stockholders equity
    
    
    97,931
    
    
    
    34,104
    
    
    
    (76,332
    )
    
    
    42,228
    
    
    
    97,931Total liabilities and stockholders equity
    
    $
    269,780
    
    
    $
    148,042
    
    
    $
    409,057
    
    
    $
    (238,625
    )
    
    $
    588,254
 31




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 Condensed Consolidating Statement of Operations
 Three Months Ended June 30, 2007Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    90,235
    
    
    $
    73,951
    
    
    $
    (7,443
    )
    
    $
    156,743Operating expenses:Contract
    
    
    
    
    
    
    75,498
    
    
    
    62,371
    
    
    
    
    
    
    
    137,869Depreciation and amortization
    
    
    
    
    
    
    2,951
    
    
    
    1,359
    
    
    
    
    
    
    
    4,310General and administrative
    
    
    39
    
    
    
    16,179
    
    
    
    4,647
    
    
    
    (7,443
    )
    
    
    13,422Government fines and penalties
    
    
    24,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,00024,039
    
    
    
    94,628
    
    
    
    68,377
    
    
    
    (7,443
    )
    
    
    179,601Operating income (loss)
    
    
    (24,039
    )
    
    
    (4,393
    )
    
    
    5,574
    
    
    
    
    
    
    
    (22,858
    )Other income (expense):Equity in income of consolidated subsidiaries
    
    
    270
    
    
    
    
    
    
    
    
    
    
    
    (270
    )
    
    
    Interest  net
    
    
    (487
    )
    
    
    143
    
    
    
    157
    
    
    
    
    
    
    
    (187
    )Other  net
    
    
    (16,380
    )
    
    
    816
    
    
    
    (313
    )
    
    
    
    
    
    
    (15,877
    )Income (loss) from continuing operations
before income taxes
    
    
    (40,636
    )
    
    
    (3,434
    )
    
    
    5,418
    
    
    
    (270
    )
    
    
    (38,922
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    (1,465
    )
    
    
    2,922
    
    
    
    
    
    
    
    1,457Income (loss) from continuing operations
    
    
    (40,636
    )
    
    
    (1,969
    )
    
    
    2,496
    
    
    
    (270
    )
    
    
    (40,379
    )Income (loss) from discontinued operations net of
provision for income taxes
    
    
    (3,603
    )
    
    
    278
    
    
    
    (535
    )
    
    
    
    
    
    
    (3,860
    )Net income (loss)
    
    $
    (44,239
    )
    
    $
    (1,691
    )
    
    $
    1,961
    
    
    $
    (270
    )
    
    $
    (44,239
    )
 Three Months Ended June 30, 2006Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    70,169
    
    
    $
    48,959
    
    
    $
    
    
    
    $
    119,128Operating expenses:Contract
    
    
    
    
    
    
    62,781
    
    
    
    42,966
    
    
    
    
    
    
    
    105,747Depreciation and amortization
    
    
    
    
    
    
    1,740
    
    
    
    1,184
    
    
    
    
    
    
    
    2,924General and administrative
    
    
    2,711
    
    
    
    4,821
    
    
    
    4,104
    
    
    
    
    
    
    
    11,6362,711
    
    
    
    69,342
    
    
    
    48,254
    
    
    
    
    
    
    
    120,307Operating income (loss)
    
    
    (2,711
    )
    
    
    827
    
    
    
    705
    
    
    
    
    
    
    
    (1,179
    )Other income (expense):Equity in loss of consolidated subsidiaries
    
    
    (33,983
    )
    
    
    
    
    
    
    
    
    
    
    33,983
    
    
    
    Interest  net
    
    
    (1,457
    )
    
    
    (214
    )
    
    
    (116
    )
    
    
    
    
    
    
    (1,787
    )Other  net
    
    
    (1
    )
    
    
    (173
    )
    
    
    (278
    )
    
    
    
    
    
    
    (452
    )Income (loss) from continuing operations
before income taxes
    
    
    (38,152
    )
    
    
    440
    
    
    
    311
    
    
    
    33,983
    
    
    
    (3,418
    )Provision for income taxes
    
    
    
    
    
    
    1,062
    
    
    
    624
    
    
    
    
    
    
    
    1,686Loss from continuing operations
    
    
    (38,152
    )
    
    
    (622
    )
    
    
    (313
    )
    
    
    33,983
    
    
    
    (5,104
    )Income (loss) from discontinued operations net of
provision for income taxes
    
    
    
    
    
    
    665
    
    
    
    (33,713
    )
    
    
    
    
    
    
    (33,048
    )Net income (loss)
    
    $
    (38,152
    )
    
    $
    43
    
    
    $
    (34,026
    )
    
    $
    33,983
    
    
    $
    (38,152
    )
 32




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 Condensed Consolidating Statement of Operations
 Six Months Ended June 30, 2007Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    239,317
    
    
    $
    141,763
    
    
    $
    (17,628
    )
    
    $
    363,452Operating expenses:Contract
    
    
    
    
    
    
    209,866
    
    
    
    121,835
    
    
    
    
    
    
    
    331,701Depreciation and amortization
    
    
    
    
    
    
    5,278
    
    
    
    2,488
    
    
    
    
    
    
    
    7,766General and administrative
    
    
    1,641
    
    
    
    32,579
    
    
    
    8,255
    
    
    
    (17,628
    )
    
    
    24,847Government fines and penalties
    
    
    24,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,00025,641
    
    
    
    247,723
    
    
    
    132,578
    
    
    
    (17,628
    )
    
    
    388,314Operating income (loss)
    
    
    (25,641
    )
    
    
    (8,406
    )
    
    
    9,185
    
    
    
    
    
    
    
    (24,862
    )Other income (expense):Equity in loss of consolidated subsidiaries
    
    
    (9,030
    )
    
    
    
    
    
    
    
    
    
    
    9,030
    
    
    
    Interest  net
    
    
    (1,468
    )
    
    
    46
    
    
    
    345
    
    
    
    
    
    
    
    (1,077
    )Other  net
    
    
    (16,379
    )
    
    
    767
    
    
    
    (455
    )
    
    
    
    
    
    
    (16,067
    )Income (loss) from continuing operations
before income taxes
    
    
    (52,518
    )
    
    
    (7,593
    )
    
    
    9,075
    
    
    
    9,030
    
    
    
    (42,006
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    (2,843
    )
    
    
    4,555
    
    
    
    
    
    
    
    1,712Income (loss) from continuing operations
    
    
    (52,518
    )
    
    
    (4,750
    )
    
    
    4,520
    
    
    
    9,030
    
    
    
    (43,718
    )Income (loss) from discontinued operations net of
provision for income taxes
    
    
    (3,568
    )
    
    
    (610
    )
    
    
    (8,190
    )
    
    
    
    
    
    
    (12,368
    )Net loss
    
    $
    (56,086
    )
    
    $
    (5,360
    )
    
    $
    (3,670
    )
    
    $
    9,030
    
    
    $
    (56,086
    )
 Six Months Ended June 30, 2006Parent
    
    
    WUSAI (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    122,989
    
    
    $
    103,726
    
    
    $
    
    
    
    $
    226,715Operating expenses:Contract
    
    
    
    
    
    
    112,412
    
    
    
    94,798
    
    
    
    
    
    
    
    207,210Depreciation and amortization
    
    
    
    
    
    
    3,694
    
    
    
    2,221
    
    
    
    
    
    
    
    5,915General and administrative
    
    
    5,371
    
    
    
    9,494
    
    
    
    7,176
    
    
    
    
    
    
    
    22,0415,371
    
    
    
    125,600
    
    
    
    104,195
    
    
    
    
    
    
    
    235,166Operating loss
    
    
    (5,371
    )
    
    
    (2,611
    )
    
    
    (469
    )
    
    
    
    
    
    
    (8,451
    )Other income (expense):Equity in loss of consolidated subsidiaries
    
    
    (34,554
    )
    
    
    
    
    
    
    
    
    
    
    34,554
    
    
    
    Interest  net
    
    
    (2,820
    )
    
    
    (363
    )
    
    
    (240
    )
    
    
    
    
    
    
    (3,423
    )Other  net
    
    
    (1
    )
    
    
    4
    
    
    
    (330
    )
    
    
    
    
    
    
    (327
    )Loss from continuing operations before
income taxes
    
    
    (42,746
    )
    
    
    (2,970
    )
    
    
    (1,039
    )
    
    
    34,554
    
    
    
    (12,201
    )Provision for income taxes
    
    
    
    
    
    
    1,011
    
    
    
    421
    
    
    
    
    
    
    
    1,432Loss from continuing operations
    
    
    (42,746
    )
    
    
    (3,981
    )
    
    
    (1,460
    )
    
    
    34,554
    
    
    
    (13,633
    )Income (loss) from discontinued operations net of
provision for income taxes
    
    
    
    
    
    
    2,370
    
    
    
    (31,483
    )
    
    
    
    
    
    
    (29,113
    )Net loss
    
    $
    (42,746
    )
    
    $
    (1,611
    )
    
    $
    (32,943
    )
    
    $
    34,554
    
    
    $
    (42,746
    )
 33




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 Condensed Consolidating Statement of Cash Flows
 Six Months Ended June 30, 2007WUSAI
    
    
    Non-WGI
    
    
    (Guarantor)
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in) operating activities
of continuing operations
    
    $
    (10,275
    )
    
    $
    786
    
    
    $
    15,495
    
    
    $
    
    
    
    $
    6,006Net cash provided by (used in) operating activities of
discontinued operations
    
    
    (3,568
    )
    
    
    (610
    )
    
    
    (12,041
    )
    
    
    
    
    
    
    (16,219
    )Cash provided by (used in) operating activities
    
    
    (13,843
    )
    
    
    176
    
    
    
    3,454
    
    
    
    
    
    
    
    (10,213
    )Cash flows from investing activities:Proceeds from sale of discontinued operations, net
    
    
    130,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,568Purchases of property, plant and equipment
    
    
    
    
    
    
    (6,927
    )
    
    
    (1,011
    )
    
    
    
    
    
    
    (7,938
    )Deposit for acquisition
    
    
    
    
    
    
    
    
    
    
    (21,181
    )
    
    
    
    
    
    
    (21,181
    )Proceeds from sales of property, plant and
equipment
    
    
    
    
    
    
    1,393
    
    
    
    35
    
    
    
    
    
    
    
    1,428Cash provided by (used) in investing activities
of continuing operations
    
    
    130,568
    
    
    
    (5,534
    )
    
    
    (22,157
    )
    
    
    
    
    
    
    102,877Cash provided by (used in) investing
activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) investing activities
    
    
    130,568
    
    
    
    (5,534
    )
    
    
    (22,157
    )
    
    
    
    
    
    
    102,877Cash flows from financing activities:Loss on early extinguishment of debt
    
    
    (12,993
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,993
    )Proceeds from issuance of common stock, net
    
    
    602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    602Advances from (repayments to) parent/affiliates
    
    
    (71,040
    )
    
    
    23,199
    
    
    
    47,841
    
    
    
    
    
    
    
    Repayment of bank and other debt
    
    
    
    
    
    
    (6,012
    )
    
    
    (8
    )
    
    
    
    
    
    
    (6,020
    )Payments on capital leases
    
    
    
    
    
    
    (1,407
    )
    
    
    (1,491
    )
    
    
    
    
    
    
    (2,898
    )Costs of debt issuance and other
    
    
    (530
    )
    
    
    (253
    )
    
    
    
    
    
    
    
    
    
    
    (783
    )Cash provided by (used in) financing activities
of continuing operations
    
    
    (83,961
    )
    
    
    15,527
    
    
    
    46,342
    
    
    
    
    
    
    
    (22,092
    )Cash provided by (used in) financing activities
of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (83,961
    )
    
    
    15,527
    
    
    
    46,342
    
    
    
    
    
    
    
    (22,092
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    (453
    )
    
    
    
    
    
    
    (453
    )Cash provided by all activities
    
    $
    32,764
    
    
    $
    10,169
    
    
    $
    27,186
    
    
    $
    
    
    
    $
    70,119
 34




---



##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements (continued)
 Condensed Consolidating Statements of Cash Flows
 Six Months Ended June 30, 2006WUSAI
    
    
    Non-WGI
    
    
    (Guarantor)
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash used in operating activities
of continuing operations
    
    $
    (6,515
    )
    
    $
    (1,335
    )
    
    $
    (2,576
    )
    
    $
    
    
    
    $
    (10,426
    )Net cash provided by (used in) operating activities of
discontinued operations
    
    
    
    
    
    
    1,490
    
    
    
    (43,356
    )
    
    
    
    
    
    
    (41,866
    )Cash provided by (used in) operating activities
    
    
    (6,515
    )
    
    
    155
    
    
    
    (45,932
    )
    
    
    
    
    
    
    (52,292
    )Cash flows from investing activities:Proceeds from sale of discontinued operations, net
    
    
    
    
    
    
    25,082
    
    
    
    
    
    
    
    
    
    
    
    25,082Purchases of property, plant and equipment
    
    
    
    
    
    
    (1,443
    )
    
    
    (3,553
    )
    
    
    
    
    
    
    (4,996
    )Proceeds from sales of property, plant and
equipment
    
    
    
    
    
    
    
    
    
    
    1,226
    
    
    
    
    
    
    
    1,226Cash provided by (used in) investing activities
of continuing operations
    
    
    
    
    
    
    23,639
    
    
    
    (2,327
    )
    
    
    
    
    
    
    21,312Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    (4,000
    )
    
    
    
    
    
    
    (4,000
    )Cash provided by (used in) investing activities
    
    
    
    
    
    
    23,639
    
    
    
    (6,327
    )
    
    
    
    
    
    
    17,312Cash flows from financing activities:Proceeds from issuance of convertible notes
    
    
    19,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,500Proceeds from issuance of common stock, net
    
    
    2,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,226Advances from (repayments to) parent/affiliates
    
    
    (41,704
    )
    
    
    (12,328
    )
    
    
    54,032
    
    
    
    
    
    
    
    Repayment of bank and other debt
    
    
    
    
    
    
    (6,160
    )
    
    
    (181
    )
    
    
    
    
    
    
    (6,341
    )Costs of debt issuance and other
    
    
    (4,124
    )
    
    
    
    
    
    
    (80
    )
    
    
    
    
    
    
    (4,204
    )Cash provided by (used in) financing activities
of continuing operations
    
    
    (24,102
    )
    
    
    (18,488
    )
    
    
    53,771
    
    
    
    
    
    
    
    11,181Cash provided by financing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (24,102
    )
    
    
    (18,488
    )
    
    
    53,771
    
    
    
    
    
    
    
    11,181Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    (118
    )
    
    
    
    
    
    
    (118
    )Cash provided by (used in) all activities
    
    $
    (30,617
    )
    
    $
    5,306
    
    
    $
    1,394
    
    
    $
    
    
    
    $
    (23,917
    )
 35




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##### Table of Contents



WILLBROS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 13. Subsequent Events
  36




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In
thousands, except share and per share amounts or unless otherwise noted)
  OVERVIEW
 Business Description
  Business Strategy
  
    
    Concentrate resources in North America to focus on the current energy infrastructure expansion cycle,
    
    Leverage our engineering expertise to attract additional EPC contracts,
    
    Increase contract margin by improving bidding discipline and contract management,
    
    Penetrate, on a selective basis, international markets with
attractive potential risk-adjusted returns,
    
    Align general and administrative (G&A) expense with revenue and maintain a ratio of
G&A to revenue of 6 to 8 percent, and
    
    Manage cash rigorously.
 Strategy Execution
 North America
   EPC
 EPC Engineering EPC EPC
 37




---



##### Table of Contents



EPC
 Consolidated Contract Margin
 Construction EPC
 Selected International Markets
  General & Administrative
  Cash Management
  Market Demand
 EPC
 EPC Engineering
 38




---



##### Table of Contents



Construction
  Significant Business Developments
 Canada Pipeline Company Acquisition
  U.S. Construction Major Contract
  Induced 6.5% Note Conversions
  Financial Summary
  Construction EPC
 Construction Engineering
 39




---



##### Table of Contents



Engineering Construction EPC
 Depreciation and amortization Construction
 G&A
 Government
fines and penalties
 Non-Operating
   Discontinued Operations
  Transition Services Agreement
  Ascot Negotiations
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
    
    FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes,
 40




---



##### Table of Contents




    
    FASB Staff Position No. AUG AIR-1, Accounting for Planned Major Maintenance Activities, and
    
    SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in the Current Year Financial Statements.
  
    
    SFAS No. 157, Fair Value Measurements,
    
    SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.
 OTHER FINANCIAL MEASURES
 EBITDA
   Six Months Ended June 30,2007
    
    
    2006Net loss
from continuing operations
    
    $
    (43,718
    )
    
    $
    (13,633
    )Interest, net
    
    
    1,077
    
    
    
    3,423Provision for income taxes
    
    
    1,712
    
    
    
    1,432Depreciation and amortization
    
    
    7,766
    
    
    
    5,915EBITDA
    
    $
    (33,163
    )
    
    $
    (2,863
    )
 BACKLOG
    41




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##### Table of Contents



RESULTS OF OPERATIONS
   Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Contract Revenue
 Construction EPC
 Three Months Ended June 30,2007
    
    
    2006
    
    
    Increase
    
    
    PercentChangeConstruction
    
    $
    111,949
    
    
    $
    87,235
    
    
    $
    24,714
    
    
    
    28.3
    %Engineering
    
    
    20,801
    
    
    
    19,924
    
    
    
    877
    
    
    
    4.4
    %EPC
    
    
    23,993
    
    
    
    11,969
    
    
    
    12,024
    
    
    
    100.5
    %Total
    
    $
    156,743
    
    
    $
    119,128
    
    
    $
    37,615
    
    
    
    31.6
    %
 Construction
 Engineering
 EPC EPC
 Contract Income
  Three Months Ended June 30,% of
    
    
    
    
    
    
    % of
    
    
    Increase
    
    
    Percent2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue
    
    
    (Decrease)
    
    
    ChangeConstruction
    
    $
    12,391
    
    
    
    11.1
    %
    
    $
    8,684
    
    
    
    10.0
    %
    
    $
    3,707
    
    
    
    42.7
    %Engineering
    
    
    6,258
    
    
    
    30.1
    %
    
    
    4,190
    
    
    
    21.0
    %
    
    
    2,068
    
    
    
    49.4
    %EPC
    
    
    225
    
    
    
    0.9
    %
    
    
    507
    
    
    
    4.2
    %
    
    
    (282
    )
    
    
    (55.6
    )%Total
    
    $
    18,874
    
    
    
    12.0
    %
    
    $
    13,381
    
    
    
    11.2
    %
    
    $
    5,493
    
    
    
    41.1
    %
 Construction Engineering Construction
 Engineering
 42




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##### Table of Contents



EPC
 Other Operating Expenses
 Depreciation and amortization
 G&A
 Government
fines and penalties
 Non-Operating Items
 Interest
income
 Interest
expense
 Other  net
 Loss
on early extinguishment of debt
 Income
tax
 Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Contract Revenue
 Construction EPC
 Six Months Ended June 30,2007
    
    
    2006
    
    
    Increase
    
    
    Percent ChangeConstruction
    
    $
    282,654
    
    
    $
    166,383
    
    
    $
    116,271
    
    
    
    69.9
    %Engineering
    
    
    40,456
    
    
    
    35,405
    
    
    
    5,051
    
    
    
    14.3
    %EPC
    
    
    40,342
    
    
    
    24,927
    
    
    
    15,415
    
    
    
    61.8
    %Total
    
    $
    363,452
    
    
    $
    226,715
    
    
    $
    136,737
    
    
    
    60.3
    %
 Construction
 43




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##### Table of Contents



Engineering
 EPC EPC
 Contract Income
  Six Months Ended June 30,2007
    
    
    % of Revenue
    
    
    2006
    
    
    % of Revenue
    
    
    Increase (Decrease)
    
    
    Percent ChangeConstruction
    
    $
    18,092
    
    
    
    6.4
    %
    
    $
    11,123
    
    
    
    6.7
    %
    
    $
    6,969
    
    
    
    62.7
    %Engineering
    
    
    10,324
    
    
    
    25.5
    %
    
    
    6,099
    
    
    
    17.2
    %
    
    
    4,225
    
    
    
    69.3
    %EPC
    
    
    3,335
    
    
    
    8.3
    %
    
    
    2,283
    
    
    
    9.2
    %
    
    
    1,052
    
    
    
    46.1
    %Total
    
    $
    31,751
    
    
    
    8.7
    %
    
    $
    19,505
    
    
    
    8.6
    %
    
    $
    12,246
    
    
    
    62.8
    %
  Construction
 Engineering
 EPC
 Other Operating Expenses
 Depreciation and amortization
 G&A
 Government
fines and penalties
 Non-Operating Items
 Interest income
 44




---



##### Table of Contents



Interest expense 
 Other  net
 Loss
on early extinguishment of debt
 Income
tax 
 LIQUIDITY AND CAPITAL RESOURCES
 Liquidity
  Capital Requirements
  Working Capital
  2006 Credit Facility
  45




---



##### Table of Contents



Private Placement
   6.5% Senior Convertible Notes
    2.75% Convertible Senior Notes
  46




---



##### Table of Contents



2004 Credit Facility
    Contractual Obligations
   NEW ACCOUNTING PRONOUNCEMENTS
  47




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
 This Form 10-Q includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts, included or incorporated by
reference in this Form 10-Q that address activities, events or developments which we expect or
anticipate will or may occur in the future, including such things as future capital expenditures
(including the amount and nature thereof), oil, gas, gas liquids and power prices, demand for our
services, the amount and nature of future investments by governments, expansion and other
development trends of the oil, gas and power industries, business strategy, expansion and growth of
our business and operations, the outcome of government investigations and legal proceedings and
other such matters are forward-looking statements. These forward-looking statements are based on
assumptions and analyses we made in light of our experience and our perception of historical
trends, current conditions and expected future developments as well as other factors we believe are
appropriate under the circumstances. However, whether actual results and developments will conform
to our expectations and predictions is subject to a number of risks and uncertainties. As a result,
actual results could differ materially from our expectations. Factors that could cause actual
results to differ from those contemplated by our forward-looking statements include, but are not
limited to, the following:
 
    
    difficulties we may encounter in connection with the recently completed sale and
disposition of our operations and assets in Nigeria, including without limitation,
obtaining indemnification for any losses we may experience if claims are made against any
corporate guarantees we provided or if calls are made against any letters of credit that
were issued on our behalf and which will remain in place subsequent to the closing;
    
    the consequences we may encounter if we were to enter into a criminal plea agreement or
a deferred prosecution agreement, including the imposition of civil or criminal fines,
penalties, monitoring arrangements, or other sanctions, including the loss of U.S.
government contracts, that might be imposed as a result of government investigations;
    
    the results of government investigations into our actions and the actions of our current
and former officers and employees, including J. Kenneth Tillery, the former President of
Willbros International, Inc.;
    
    adverse results that we could suffer in civil litigation involving or arising from the
actions of our former employees and officers;
    
    the assertion by parties to contracts with us that the actions of our former officers
and employees were improper which constitutes a breach of, or otherwise gives rise to
claims under, contracts to which we are a party;
    
    determination that the actions of our former employees caused us to breach our credit
agreements or debt instruments, which could result in the lack of access to our credit
facilities and the requirement to cash collateralize our existing letters of credit;
    
    the commencement by foreign governmental authorities of investigations into the actions
of our current and former employees, and the determination that such actions constituted
violations of foreign law;
    
    the dishonesty of employees and/or other representatives or their refusal to abide by
applicable laws and our established policies and rules;
    
    curtailment of capital expenditures in the oil, gas, and power industries;
    
    political or social circumstances impeding the progress of our work and increasing the
cost of performance;
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
    
    failure to obtain the timely award of one or more projects;
    
    cancellation of projects, in whole or in part;
    
    adverse weather conditions not anticipated in bids and estimates;
    
    project cost overruns, unforeseen schedule delays, and the application of liquidated damages;
    
    failing to realize cost recoveries from projects completed or in progress within a
reasonable period after completion of the relevant project;
    
    inability to identify and acquire suitable acquisition targets on reasonable terms;
    
    inability to obtain adequate financing;
    
    inability to obtain sufficient surety bonds or letters of credit;
    
    loss of the services of key management personnel;
    
    the demand for energy moderating or diminishing;
    
    downturns in general economic, market or business conditions in our target markets;
    
    changes in the effective tax rate in countries where our work will be performed;
    
    changes in applicable laws or regulations, or changed interpretations thereof;
    
    changes in the scope of our expected insurance coverage;
    
    inability to manage insurable risk at an affordable cost;
    
    inability to hire and retain sufficient skilled labor to execute our current work, our
work in backlog, and future projects we have not been awarded yet;
    
    inability to execute cost reimbursable jobs within the
target cost, thus eroding contract margin on the project, but not
contract income on the project;
    
    the occurrence of the risk factors listed under Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2006, and in our other filings with the Securities and
Exchange Commission from time to time; and
    
    other factors, most of which are beyond our control.
 Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by
these cautionary statements and there can be no assurance that the actual results or developments
we anticipate will be realized or, even if substantially realized, that they will have the
consequences for, or effects on, our business or operations that we anticipate today. We assume no
obligation to update publicly any such forward-looking statements, whether as a result of new
information, future events or otherwise. For a more complete description of the circumstances
surrounding the actions of our current and former employees, see the Risk Factors included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2006, beginning on page 27.
 Unless the context otherwise requires, all references in this Form 10-Q to Willbros, the
Company, we, us and our refer to Willbros Group, Inc., its consolidated subsidiaries and
their predecessors.
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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
    50




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
     
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Maximum Number (orTotal Number of
    
    Approximate DollarShares Purchased as
    
    Value) of SharesPart of Publicly
    
    That May Yet BeTotal Number of
    
    Average Price
    
    Announced Plans or
    
    Purchased Under theShares Purchased
    
    Paid Per Share
    
    Programs
    
    Plans or ProgramsApril 1, 2007  April 30, 2007
    
    
    163
    (1)
    
    $
    23.66
    (2)
    
    
    
    
    
    
    May 1, 2007  May 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2007  June 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    163
    
    
    $
    23.66
    
    
    
    
    
    
    
    
 
 (1)
    
    Shares of common stock acquired from certain of our officers and key employees
under the share withholding provisions of our 1996 Stock Plan for the payment of taxes
associated with the vesting of shares of restricted stock granted under such plan.(2)
    
    The price paid per common share represents the closing sales price of a share of
our common stock, as reported in the New York Stock Exchange composite transactions, on the
day that the stock was acquired by us.
 
 Item 3. Defaults upon Senior Securities
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Item 4. Submission of Matters to a Vote of Security Holders
   Votes
    
    Votes Against OrFor
    
    Withheld
    
    Abstentions
    
    Broker Non-Votes1. Election of Directors:John T. McNabb, II
    
    
    18,151,816
    
    
    
    2,166,740
    
    
    
    
    
    
    
    Robert L. Sluder
    
    
    20,266,016
    
    
    
    52,540
    
    
    
    
    
    
    
    S. Miller Williams
    
    
    20,048,617
    
    
    
    269,939
    
    
    
    
    
    
    
    
 
 Item 5. Other Information
  
 Item 6. Exhibits
   10.1
    
    Conversion Agreement dated May 16, 2007, between us and a holder of $14.5 million in
aggregate principal amount of our 6.5% Senior Convertible Notes due 2012 (the 6.5% Notes)
(filed as Exhibit 10.1 to our current report on Form 8-K dated May 16, 2007, filed May 17,
2007).10.2
    
    Conversion Agreement dated May 16, 2007, between us and a holder of $21.75 million in
aggregate principal amount of the 6.5% Notes (filed as Exhibit 10.2 to our current report on
Form 8-K dated May 16, 2007, filed May 17, 2007).10.3
    
    Form of Conversion Agreement between us and holders of the 6.5% Notes (filed as Exhibit 10.1
to our current report on Form 8-K dated May 23, 2007, filed May 24, 2007).10.4
    
    Share Purchase Agreement dated June 5, 2007, between Willbros Acquisition Canada Limited and
AMEC Inc. and AMEC Americas Limited.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURE
  WILLBROS GROUP, INC.Date: August 9, 2007
    By:
    /s/ Van A. WelchVan A. WelchSenior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer) 53




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description10.1
    
    Conversion Agreement dated May 16, 2007, between us and a holder of $14.5 million in
aggregate principal amount of our 6.5% Senior Convertible Notes due 2012 (the 6.5% Notes)
(filed as Exhibit 10.1 to our current report on Form 8-K dated May 16, 2007, filed May 17,
2007).10.2
    
    Conversion Agreement dated May 16, 2007, between us and a holder of $21.75 million in
aggregate principal amount of the 6.5% Notes (filed as Exhibit 10.2 to our current report on
Form 8-K dated May 16, 2007, filed May 17, 2007).10.3
    
    Form of Conversion Agreement between us and holders of the 6.5% Notes (filed as Exhibit 10.1
to our current report on Form 8-K dated May 23, 2007, filed May 24, 2007).10.4
    
    Share Purchase Agreement dated June 5, 2007, between Willbros Acquisition Canada Limited and
AMEC Inc. and AMEC Americas Limited.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 54