##### 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 March 31, 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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##### Table of Contents



WILLBROS GROUP, INC.
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 2007
 PagePART I - FINANCIAL INFORMATIONItem 1 - Financial StatementsCondensed Consolidated Balance Sheets (Unaudited) as of March 31, 2007 and
December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the three
months ended March 31, 2007 and 2006
    
    
    4Condensed Consolidated Statement of Stockholders Equity and Comprehensive
Income (Loss) (Unaudited) for the three months ended March 31, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the
three months ended March 31, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    8Item 2 - Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    32Item 3 - Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4 - Controls and Procedures
    
    
    43PART
II - OTHER INFORMATIONItem 1 - Legal Proceedings
    
    
    44Item 1A - Risk Factors
    
    
    44Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3 - Defaults Upon Senior Securities
    
    
    44Item 4 - Submission of Matters to a Vote of Security Holders
    
    
    44Item 5 - Other Information
    
    
    44Item 6 - Exhibits
    
    
    45SIGNATURE
    
    
    46EXHIBIT INDEX
    
    
    47Certification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350
 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share amounts)
 (Unaudited)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    145,439
    
    
    $
    37,643Accounts receivable, net of allowance of $697 and $598
    
    
    121,168
    
    
    
    137,104Contract cost and recognized income not yet billed
    
    
    14,142
    
    
    
    11,027Prepaid expenses
    
    
    28,460
    
    
    
    17,299Parts and supplies inventories
    
    
    2,267
    
    
    
    2,069Assets of discontinued operations
    
    
    6,264
    
    
    
    294,192Total current assets
    
    
    317,740
    
    
    
    499,334Deferred tax assets
    
    
    7,688
    
    
    
    5,064Property, plant and equipment, net of accumulated depreciation of
$81,436 and $78,941
    
    
    65,901
    
    
    
    65,347Goodwill
    
    
    6,696
    
    
    
    6,683Other assets
    
    
    12,689
    
    
    
    11,826Total assets
    
    $
    410,714
    
    
    $
    588,254LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of long-term debt
    
    $
    13,016
    
    
    $
    5,562Accounts payable and accrued liabilities
    
    
    130,603
    
    
    
    122,352Contract billings in excess of cost and recognized income
    
    
    6,632
    
    
    
    14,947Accrued income tax
    
    
    3,428
    
    
    
    3,556Liabilities of discontinued operations
    
    
    3,015
    
    
    
    182,092Total current liabilities
    
    
    156,694
    
    
    
    328,5092.75% convertible senior notes
    
    
    70,000
    
    
    
    70,0006.5% senior convertible notes
    
    
    84,500
    
    
    
    84,500Long-term debt
    
    
    8,065
    
    
    
    7,077Long-term liability for unrecognized tax benefits
    
    
    6,649
    
    
    
    Other liabilities
    
    
    237
    
    
    
    237Total liabilities
    
    
    326,145
    
    
    
    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; 26,235,940 shares issued (25,848,596 at
December 31, 2006)
    
    
    1,312
    
    
    
    1,292Capital in excess of par value
    
    
    218,513
    
    
    
    217,036Accumulated deficit
    
    
    (138,819
    )
    
    
    (120,603
    )Treasury stock at cost, 196,697 shares (167,844 at December 31, 2006)
    
    
    (2,647
    )
    
    
    (2,154
    )Accumulated other comprehensive income
    
    
    6,210
    
    
    
    2,360Total stockholders equity
    
    
    84,569
    
    
    
    97,931Total liabilities and stockholders equity
    
    $
    410,714
    
    
    $
    588,254
  3




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WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except share and per share amounts)
 (Unaudited)
 Three Months Ended March 31,2007
    
    
    2006Contract revenue
    
    $
    206,709
    
    
    $
    107,586Operating expenses:Contract
    
    
    193,832
    
    
    
    101,460Depreciation and amortization
    
    
    3,456
    
    
    
    3,005General and administrative
    
    
    11,425
    
    
    
    10,407208,713
    
    
    
    114,872Operating loss
    
    
    (2,004
    )
    
    
    (7,286
    )Other income (expense):Interest  net
    
    
    (890
    )
    
    
    (1,636
    )Other  net
    
    
    (190
    )
    
    
    126(1,080
    )
    
    
    (1,510
    )Loss from continuing operations
before income taxes
    
    
    (3,084
    )
    
    
    (8,796
    )Provision (benefit) for income taxes
    
    
    255
    
    
    
    (255
    )Net loss from continuing operations
    
    
    (3,339
    )
    
    
    (8,541
    )Income
(loss) from discontinued operations,
net of provision for income taxes
    
    
    (8,508
    )
    
    
    3,948Net loss
    
    $
    (11,847
    )
    
    $
    (4,593
    )Basic loss per common share:Loss from continuing operations
    
    $
    (0.13
    )
    
    $
    (0.40
    )Income (loss) from discontinued operations
    
    
    (0.33
    )
    
    
    0.18Net loss
    
    $
    (0.46
    )
    
    $
    (0.22
    )Diluted loss per common share:Loss from continuing operations
    
    $
    (0.13
    )
    
    $
    (0.40
    )Income (loss) from discontinued operations
    
    
    (0.33
    )
    
    
    0.18Net loss
    
    $
    (0.46
    )
    
    $
    (0.22
    )Weighted average number of common
shares outstanding:Basic
    
    
    25,503,652
    
    
    
    21,345,530Diluted
    
    
    25,503,652
    
    
    
    21,345,530
  4




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WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AND COMPREHENSIVE INCOME (LOSS)
 (In thousands, except share amounts)
 (Unaudited)
 AccumulatedOtherCapital
    
    
    
    
    
    
    
    
    
    
    Compre-
    
    
    Totalin Excess
    
    
    Accumu-
    
    
    
    
    
    
    hensive
    
    
    Stock-Common Stock
    
    
    of Par
    
    
    lated
    
    
    Treasury
    
    
    Income
    
    
    holdersShares
    
    
    Par Value
    
    
    Value
    
    
    Deficit
    
    
    Stock
    
    
    (Loss)
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,847
    )
    
    
    
    
    
    
    
    
    
    
    (11,847
    )Realization of loss on
sale of Nigeria
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,773
    (1)
    
    
    3,773Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    77Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,997
    )Deferred compensation
    
    
    
    
    
    
    
    
    
    
    987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    987Restricted stock grants
    
    
    342,011
    
    
    
    17
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vesting of restricted
stock rights
    
    
    9,583
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additions to treasury stock,
vesting restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (493
    )
    
    
    
    
    
    
    (493
    )Exercise of stock
options
    
    
    35,750
    
    
    
    2
    
    
    
    519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    521Additional cost of private
placement of equity
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )Balance, March 31, 2007
    
    
    26,235,940
    
    
    $
    1,312
    
    
    $
    218,513
    
    
    $
    (138,819
    )
    
    $
    (2,647
    )
    
    $
    6,210
    
    
    $
    84,569
  
 (1)
    
    Removal of previously recorded foreign
currency translation adjustments associated with the Companys Nigeria
operations. 5




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WILLBROS GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three MonthsEnded March 31,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (11,847
    )
    
    $
    (4,593
    )Reconciliation of net loss to net cash provided by
(used in) operating activities:(Income) loss from discontinued operations
    
    
    8,508
    
    
    
    (3,948
    )Depreciation and amortization
    
    
    3,456
    
    
    
    3,005Amortization of debt issue costs
    
    
    519
    
    
    
    434Amortization of deferred compensation
    
    
    987
    
    
    
    864Amortization of discount on notes receivable for stock
purchases
    
    
    
    
    
    
    (4
    )Loss (gain) on retirements of property, plant and equipment
    
    
    82
    
    
    
    (262
    )Provision for bad debts
    
    
    142
    
    
    
    35Deferred income tax provision
    
    
    (2,624
    )
    
    
    (5,830
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    13,076
    
    
    
    9,559Contract cost and recognized income not yet billed
    
    
    (3,108
    )
    
    
    (4,937
    )Prepaid expenses
    
    
    (1,110
    )
    
    
    1,486Parts and supplies inventories
    
    
    (195
    )
    
    
    162Other assets
    
    
    (1,116
    )
    
    
    (516
    )Accounts payable and accrued liabilities
    
    
    (5,866
    )
    
    
    (51
    )Accrued income tax
    
    
    (140
    )
    
    
    4,004Contract billings in excess of cost and recognized income
    
    
    (8,384
    )
    
    
    (1,646
    )Long-term
liability for unrecognized tax benefits
    
    
    280
    
    
    
    Other liabilities
    
    
    
    
    
    
    504Cash used in operating activities of continuing
operations
    
    
    (7,340
    )
    
    
    (1,734
    )Cash used in operating activities of
discontinued operations
    
    
    (9,650
    )
    
    
    (27,284
    )Cash used in operating activities
    
    
    (16,990
    )
    
    
    (29,018
    )Cash flows from investing activities:Proceeds from sale of discontinued operations, net
    
    
    130,568
    
    
    
    25,082Proceeds from sale of property, plant and equipment
    
    
    46
    
    
    
    208Purchases of property, plant and equipment
    
    
    (1,826
    )
    
    
    (3,563
    )Increase in restricted cash
    
    
    
    
    
    
    (4,064
    )Cash provided by investing activities of
continuing operations
    
    
    128,788
    
    
    
    17,663Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (2,150
    )Cash provided by investing activities
    
    
    128,788
    
    
    
    15,513Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    510
    
    
    
    167Proceeds from issuance of 6.5% senior convertible notes
    
    
    
    
    
    
    19,500Repayment of notes payable
    
    
    (3,261
    )
    
    
    (1,673
    )Payments on capital leases
    
    
    (676
    )
    
    
    Acquisition of treasury stock
    
    
    (493
    )
    
    
    (383
    )Costs of debt issues
    
    
    (265
    )
    
    
    (2,991
    )Repayments of long-term debt
    
    
    
    
    
    
    (39
    )
 6




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WILLBROS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
 Three MonthsEnded March 31,2007
    
    
    2006Cash provided by (used in) financing activities of
continuing operations
    
    $
    (4,185
    )
    
    $
    14,581Cash provided by (used in) financing activities of
discontinued operations
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (4,185
    )
    
    
    14,581Effect of exchange rate changes on cash and cash equivalents
    
    
    183
    
    
    
    40Cash provided by all activities
    
    
    107,796
    
    
    
    1,116Cash and cash equivalents, beginning of period
    
    
    37,643
    
    
    
    55,933Cash and cash equivalents, end of period
    
    $
    145,439
    
    
    $
    57,049Supplemental cash flow information:Cash paid for interest (including discontinued operations)
    
    $
    1,229
    
    
    $
    804Cash paid for income taxes (including discontinued operations)
    
    $
    2,557
    
    
    $
    5,580Non-cash investing and financing transactions (all related to continuing
operations):Prepaid insurance obtained by note payable
    
    $
    10,051
    
    
    $
    9,385Receivable obtained by sale of discontinued operations
    
    $
    2,625
    
    
    $
    Property and equipment obtained by capital lease
    
    $
    2,233
    
    
    $
    
  7




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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)
 1. Basis of Presentation
         2. New Accounting Pronouncements
 FIN 48
  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 (continued)
    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
    
    
    31Additions for tax positions of prior years
    
    
    91Balance at March 31, 2007
    
    $
    6,649
  FSP AUG AIR-1
  SFAS No. 157
  SAB 108
  9




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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 (continued)
 SFAS No. 159
  3. Discontinuance of Operations, Asset Disposals, and Transition Services Agreement
 Strategic Decisions
  Nigeria
 Business Disposal
     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)
   Transition Services Agreement
   Venezuela
 Business Disposal
  TXP-4 Plant
 Asset Disposal
   11




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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)Results of Discontinued OperationsCondensed Statements of Operations of Discontinued Operations are as follows:
 Three Months Ended March 31, 2007Nigeria
    
    
    
    
    
    
    
    
    
    
    DiscontinuedNigeria(1)
    
    
    TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    30,046
    
    
    $
    6,362
    
    
    $
    
    
    
    $
    
    
    
    $
    36,408Operating expenses:Contract
    
    
    34,360
    
    
    
    5,864
    
    
    
    
    
    
    
    
    
    
    
    40,224Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    3,472
    
    
    
    95
    
    
    
    
    
    
    
    
    
    
    
    3,56737,832
    
    
    
    5,959
    
    
    
    
    
    
    
    
    
    
    
    43,791Operating income (loss)
    
    
    (7,786
    )
    
    
    403
    
    
    
    
    
    
    
    
    
    
    
    (7,383
    )Other income
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216Income (loss) before income taxes
    
    
    (7,570
    )
    
    
    403
    
    
    
    
    
    
    
    
    
    
    
    (7,167
    )Provision for income taxes
    
    
    1,092
    
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    1,341Net income (loss)
    
    $
    (8,662
    )
    
    $
    154
    
    
    $
    
    
    
    $
    
    
    
    $
    (8,508
    )
 
 (1)
    
    Reflects operations through February 7, 2007. Three Months Ended March 31, 2006Nigeria
    
    
    
    
    
    
    
    
    
    
    DiscontinuedNigeria
    
    
    TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsContract revenue
    
    $
    140,829
    
    
    $
    
    
    
    $
    81
    
    
    $
    
    
    
    $
    140,910Operating expenses:Contract
    
    
    125,306
    
    
    
    
    
    
    
    361
    
    
    
    
    
    
    
    125,667Depreciation and amortization
    
    
    1,949
    
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    2,170General and administrative
    
    
    5,162
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    5,244132,417
    
    
    
    
    
    
    
    664
    
    
    
    
    
    
    
    133,081Operating income (loss)
    
    
    8,412
    
    
    
    
    
    
    
    (583
    )
    
    
    
    
    
    
    7,829Other income
    
    
    224
    
    
    
    
    
    
    
    85
    
    
    
    2,033
    
    
    
    2,342Income (loss) before taxes
    
    
    8,636
    
    
    
    
    
    
    
    (498
    )
    
    
    2,033
    
    
    
    10,171Provision for income taxes
    
    
    5,524
    
    
    
    
    
    
    
    8
    
    
    
    691
    
    
    
    6,223Net income (loss)
    
    $
    3,112
    
    
    $
    
    
    
    $
    (506
    )
    
    $
    1,342
    
    
    $
    3,948
 12




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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 OperationsCondensed Balance Sheets of Discontinued Operations are as follows:
 March 31, 2007Nigeria
    
    
    
    
    
    
    
    
    
    
    DiscontinuedNigeria
    
    
    TSA
    
    
    Venezuela
    
    
    Opal TXP-4
    
    
    OperationsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    1,873
    
    
    $
    
    
    
    $
    
    
    
    $
    1,873Accounts receivable, net
    
    
    
    
    
    
    4,391
    
    
    
    
    
    
    
    
    
    
    
    4,391Contract cost and recognized income not
yet billed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prepaid expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Parts and supplies inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current assets
    
    
    
    
    
    
    6,264
    
    
    
    
    
    
    
    
    
    
    
    6,264Property, plant and equipment, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investments in joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    
    
    
    
    
    6,264
    
    
    
    
    
    
    
    
    
    
    
    6,264Current liabilities
    
    
    
    
    
    
    1,015
    
    
    
    
    
    
    
    
    
    
    
    1,015Advances
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Total current liabilities
    
    
    
    
    
    
    3,015
    
    
    
    
    
    
    
    
    
    
    
    3,015Net assets of discontinued operations
    
    $
    
    
    
    $
    3,249
    
    
    $
    
    
    
    $
    
    
    
    $
    3,249
 December 31, 2006Nigeria
    
    
    
    
    
    
    
    
    
    
    DiscontinuedNigeria
    
    
    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 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
 Cash
  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)
 Inventory
  Loss
Provision on Contracts
  Contingencies, Commitments and Other Circumstances
  4. Contracts in Progress
   March 31,
    
    
    December 31,2007
    
    
    2006Costs incurred on contracts in progress
    
    $
    391,375
    
    
    $
    188,030Recognized income
    
    
    19,391
    
    
    
    12,039410,766
    
    
    
    200,069Progress billings and advance payments
    
    
    (403,256
    )
    
    
    (203,989
    )$
    7,510
    
    
    $
    (3,920
    )Contract cost and recognized income not yet billed
    
    $
    14,142
    
    
    $
    11,027Contract billings in excess of cost and recognized income
    
    
    (6,632
    )
    
    
    (14,947
    )$
    7,510
    
    
    $
    (3,920
    )
  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)
 5.
    
    Long-term DebtLong-term debt as of March 31, 2007 and December 31, 2006 were as follows:
 March 31,
    
    
    December 31,2007
    
    
    20066.5% senior convertible notes
    
    $
    84,500
    
    
    $
    84,5002.75% convertible senior notes
    
    
    70,000
    
    
    
    70,000Capital lease obligations
    
    
    13,166
    
    
    
    11,601Other obligations
    
    
    123
    
    
    
    512006 Credit Facility
    
    
    
    
    
    
    Total debt
    
    
    167,789
    
    
    
    166,152Less current portion
    
    
    (5,224
    )
    
    
    (4,575
    )Long-term debt
    
    $
    162,565
    
    
    $
    161,577
 2006 Credit Facility
   15




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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)
 5. Long -term Debt (continued)
  6.5% Senior Convertible Notes
      16




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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)
 5. Long-term Debt (continued)
  2.75% Convertible Senior Notes
    17




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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)
 5. Long-term Debt (continued)
 2004 Credit Facility
   Capital Leases
  March 31,
    
    
    December 31,2007
    
    
    2006Construction equipment
    
    $
    12,912
    
    
    $
    10,662Land and buildings
    
    
    1,451
    
    
    
    1,446Furniture and equipment
    
    
    535
    
    
    
    535Total assets held under capital lease
    
    
    14,898
    
    
    
    12,643Less accumulated amortization
    
    
    (2,273
    )
    
    
    (1,572
    )Net assets under capital lease
    
    $
    12,625
    
    
    $
    11,071
 6. Loss Per Share
  18




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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 (continued)
  Three MonthsEnded March 31,2007
    
    
    2006Net loss from continuing operations applicable to common
shares
    
    $
    (3,339
    )
    
    $
    (8,541
    )Weighted average number of common shares outstanding
for basic loss per share
    
    
    25,503,652
    
    
    
    21,345,530Weighted average number of dilutive potential common
shares outstanding
    
    
    
    
    
    
    Weighted average number of common shares outstanding
for diluted loss per share
    
    
    25,503,652
    
    
    
    21,345,530Loss per common share from continuing operations:Basic
    
    $
    (0.13
    )
    
    $
    (0.40
    )Diluted
    
    $
    (0.13
    )
    
    $
    (0.40
    )
  Three MonthsEnded March 31,2007
    
    
    20062.75% Convertible senior notes
    
    
    3,595,277
    
    
    
    3,595,2776.5% Senior convertible notes
    
    
    4,813,171
    
    
    
    4,813,171Stock options
    
    
    771,000
    
    
    
    997,400Warrants to purchase common stock
    
    
    558,354
    
    
    
    Restricted stock
    
    
    520,127
    
    
    
    255,00010,257,929
    
    
    
    9,660,848
  7. Segment Information
 Construction Engineering, Engineering, Procurement and
Construction EPC). US & Canada International
  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)
 7. Segment Information (continued)
  Construction
    
    
    Engineering
    
    
    EPC
    
    
    ConsolidatedContract revenue
    
    $
    170,705
    
    
    $
    19,655
    
    
    $
    16,349
    
    
    $
    206,709Operating expenses:Contract
    
    
    165,004
    
    
    
    15,589
    
    
    
    13,239
    
    
    
    193,832Depreciation and amortization
    
    
    2,843
    
    
    
    151
    
    
    
    462
    
    
    
    3,456General and administrative
    
    
    9,171
    
    
    
    1,463
    
    
    
    791
    
    
    
    11,425177,018
    
    
    
    17,203
    
    
    
    14,492
    
    
    
    208,713Operating income (loss)
    
    $
    (6,313
    )
    
    $
    2,452
    
    
    $
    1,857
    
    
    
    (2,004
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,080
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,339
    )Loss from discontinued operations, net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,508
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (11,847
    )
  Construction
    
    
    Engineering
    
    
    EPC
    
    
    ConsolidatedContract revenue
    
    $
    79,147
    
    
    $
    15,481
    
    
    $
    12,958
    
    
    $
    107,586Operating expenses:Contract
    
    
    76,708
    
    
    
    13,571
    
    
    
    11,181
    
    
    
    101,460Depreciation and amortization
    
    
    2,106
    
    
    
    232
    
    
    
    667
    
    
    
    3,005General and administrative
    
    
    8,057
    
    
    
    1,904
    
    
    
    446
    
    
    
    10,40786,871
    
    
    
    15,707
    
    
    
    12,294
    
    
    
    114,872Operating income (loss)
    
    $
    (7,724
    )
    
    $
    (226
    )
    
    $
    664
    
    
    
    (7,286
    )Interest and other income
(expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,510
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255
    )Net loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,541
    )Income from discontinued operations, net of provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,948Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,593
    )
 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 (continued)
  March 31,
    
    
    December 31,2007
    
    
    2006Construction
    
    $
    193,700
    
    
    $
    196,253Engineering
    
    
    15,586
    
    
    
    14,955EPC
    
    
    13,683
    
    
    
    15,170Corporate shared assets
    
    
    181,481
    
    
    
    67,684Total segment assets
    
    $
    404,450
    
    
    $
    294,062
 8. Stockholders Equity
  Stock Ownership Plans
     21




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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)
   Three Months EndedMarch 31,2006Weighted 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
    %
   WeightedAverageNumber of
    
    
    ExerciseOptions
    
    
    PriceOutstanding at January 1, 2007
    
    
    806,750
    
    
    $
    13.46Granted
    
    
    
    
    
    
    Exercised
    
    
    35,750
    
    
    
    14.56Forfeited
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    771,000
    
    
    $
    13.40Exercisable at March 31, 2007
    
    
    594,333
    
    
    $
    12.20
    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)
 8. Stockholders Equity (continued)
 WeightedAverageGrant-DateShares
    
    
    Fair ValueNonvested, January 1, 2007
    
    
    202,500
    
    
    $
    6.40Granted
    
    
    
    
    
    
    Vested
    
    
    25,833
    
    
    
    5.47Forfeited or expired
    
    
    
    
    
    
    Nonvested, March 31, 2007
    
    
    176,667
    
    
    $
    6.53
  WeightedAverageNumber of
    
    
    Grant-DateRSUs
    
    
    Fair ValueOutstanding at January 1, 2007
    
    
    300,116
    
    
    $
    17.85Granted
    
    
    388,919
    
    
    
    21.13Vested
    
    
    102,708
    
    
    
    17.55Forfeited
    
    
    3,000
    
    
    
    21.89Outstanding at March 31, 2007
    
    
    583,327
    
    
    $
    20.07
   Warrants to Purchase Common Stock
  9. Income Taxes
   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)
 9. Income Taxes (continued)
  10. Foreign Exchange Risk
  11. Contingencies, Commitments and Other Circumstances
     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)
 11 Contingencies, Commitments and Other Circumstances (continued)
     /
  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)
 11. Contingencies, Commitments and Other Circumstances (continued)
  st
      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)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements
   March 31, 2007 and December 31, 2006
Willbros Group, Inc. and Subsidiaries  Condensed Consolidating Balance Sheets
 March 31, 2007WUSAIParent
    
    
    (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    131,206
    
    
    $
    (708
    )
    
    $
    14,941
    
    
    $
    
    
    
    $
    145,439Accounts receivable, net
    
    
    3,031
    
    
    
    60,126
    
    
    
    58,011
    
    
    
    
    
    
    
    121,168Contract cost and recognized income not yet billed
    
    
    
    
    
    
    6,156
    
    
    
    7,986
    
    
    
    
    
    
    
    14,142Prepaid expenses
    
    
    11
    
    
    
    27,517
    
    
    
    932
    
    
    
    
    
    
    
    28,460Parts and supplies inventories
    
    
    
    
    
    
    560
    
    
    
    1,707
    
    
    
    
    
    
    
    2,267Assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    6,264
    
    
    
    
    
    
    
    6,264Receivables from affiliated companies
    
    
    213,289
    
    
    
    
    
    
    
    
    
    
    
    (213,289
    )
    
    
    Total current assets
    
    
    347,537
    
    
    
    93,651
    
    
    
    89,841
    
    
    
    (213,289
    )
    
    
    317,740Deferred tax assets
    
    
    
    
    
    
    7,766
    
    
    
    (78
    )
    
    
    
    
    
    
    7,688Property, plant and equipment, net
    
    
    
    
    
    
    31,019
    
    
    
    34,882
    
    
    
    
    
    
    
    65,901Investment in subsidiaries
    
    
    (83,378
    )
    
    
    
    
    
    
    
    
    
    
    83,378
    
    
    
    Other assets
    
    
    6,014
    
    
    
    5,227
    
    
    
    8,144
    
    
    
    
    
    
    
    19,385Total assets
    
    $
    270,173
    
    
    $
    137,663
    
    
    $
    132,789
    
    
    $
    (129,911
    )
    
    $
    410,714LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of long-term debt
    
    $
    
    
    
    $
    11,177
    
    
    $
    1,839
    
    
    $
    
    
    
    $
    13,016Accounts payable and accrued liabilities
    
    
    31,104
    
    
    
    55,794
    
    
    
    43,705
    
    
    
    
    
    
    
    130,603Contract billings in excess of cost and recognized
income
    
    
    
    
    
    
    4,089
    
    
    
    2,543
    
    
    
    
    
    
    
    6,632Accrued income tax
    
    
    
    
    
    
    1,882
    
    
    
    1,546
    
    
    
    
    
    
    
    3,428Liabilities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    6,181
    
    
    
    (3,166
    )
    
    
    3,015Payables to affiliated companies
    
    
    
    
    
    
    27,775
    
    
    
    182,348
    
    
    
    (210,123
    )
    
    
    Total current liabilities
    
    
    31,104
    
    
    
    100,717
    
    
    
    238,162
    
    
    
    (213,289
    )
    
    
    156,694Long-term debt
    
    
    154,500
    
    
    
    6,411
    
    
    
    1,654
    
    
    
    
    
    
    
    162,565Long-term liability for unrecognized tax benefits
    
    
    
    
    
    
    2,891
    
    
    
    3,758
    
    
    
    
    
    
    
    6,649Other liabilities
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    
    
    
    
    237Total liabilities
    
    
    185,604
    
    
    
    110,019
    
    
    
    243,811
    
    
    
    (213,289
    )
    
    
    326,145Stockholders equity:Common stock
    
    
    1,312
    
    
    
    8
    
    
    
    32
    
    
    
    (40
    )
    
    
    1,312Capital in excess of par value
    
    
    218,513
    
    
    
    89,156
    
    
    
    8,526
    
    
    
    (97,682
    )
    
    
    218,513Accumulated deficit
    
    
    (138,819
    )
    
    
    (61,520
    )
    
    
    (122,717
    )
    
    
    184,237
    
    
    
    (138,819
    )Other stockholders equity components
    
    
    3,563
    
    
    
    
    
    
    
    3,137
    
    
    
    (3,137
    )
    
    
    3,563Total stockholders equity
    
    
    84,569
    
    
    
    27,644
    
    
    
    (111,022
    )
    
    
    83,378
    
    
    
    84,569Total liabilities and stockholders equity
    
    $
    270,173
    
    
    $
    137,663
    
    
    $
    132,789
    
    
    $
    (129,911
    )
    
    $
    410,714
 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)
 12. Parent, Guarantor and Non-Guarantor Condensed Consolidating Financial Statements
(continued)
 Condensed Consolidating Balance Sheets
 December 31, 2006WUSAIParent
    
    
    (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 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
    
    $
    
    
    
    $
    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 tax
    
    
    
    
    
    
    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 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
 28




---



##### 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 March 31, 2007WUSAIParent
    
    
    (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    149,927
    
    
    $
    66,962
    
    
    $
    (10,180
    )
    
    $
    206,709Operating expenses:Contract
    
    
    
    
    
    
    135,208
    
    
    
    58,624
    
    
    
    
    
    
    
    193,832Depreciation and amortization
    
    
    
    
    
    
    2,327
    
    
    
    1,129
    
    
    
    
    
    
    
    3,456General and administrative
    
    
    1,602
    
    
    
    16,395
    
    
    
    3,586
    
    
    
    (10,158
    )
    
    
    11,4251,602
    
    
    
    153,930
    
    
    
    63,339
    
    
    
    (10,158
    )
    
    
    208,713Operating income (loss)
    
    
    (1,602
    )
    
    
    (4,003
    )
    
    
    3,623
    
    
    
    (22
    )
    
    
    (2,004
    )Other income (expense):Equity in loss of consolidated subsidiaries
    
    
    (9,299
    )
    
    
    
    
    
    
    
    
    
    
    9,299
    
    
    
    Interest  net
    
    
    (981
    )
    
    
    (97
    )
    
    
    188
    
    
    
    
    
    
    
    (890
    )Other  net
    
    
    
    
    
    
    (48
    )
    
    
    (142
    )
    
    
    
    
    
    
    (190
    )Income (loss) from continuing operations before
income taxes
    
    
    (11,882
    )
    
    
    (4,148
    )
    
    
    3,669
    
    
    
    9,277
    
    
    
    (3,084
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    (1,383
    )
    
    
    1,638
    
    
    
    
    
    
    
    255Net income (loss) from continuing operations
    
    
    (11,882
    )
    
    
    (2,765
    )
    
    
    2,031
    
    
    
    9,277
    
    
    
    (3,339
    )Income
(loss) from discontinued operations, net of
provision for income taxes
    
    
    35
    
    
    
    (894
    )
    
    
    (7,671
    )
    
    
    22
    
    
    
    (8,508
    )Net income (loss)
    
    $
    (11,847
    )
    
    $
    (3,659
    )
    
    $
    (5,640
    )
    
    $
    9,299
    
    
    $
    (11,847
    )
 Three Months Ended March 31, 2006WUSAIParent
    
    
    (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedContract revenue
    
    $
    
    
    
    $
    58,140
    
    
    $
    54,767
    
    
    $
    (5,321
    )
    
    $
    107,586Operating expenses:Contract
    
    
    
    
    
    
    49,630
    
    
    
    51,830
    
    
    
    
    
    
    
    101,460Depreciation and amortization
    
    
    
    
    
    
    1,954
    
    
    
    1,051
    
    
    
    
    
    
    
    3,005General and administrative
    
    
    2,660
    
    
    
    8,030
    
    
    
    5,038
    
    
    
    (5,321
    )
    
    
    10,4072,660
    
    
    
    59,614
    
    
    
    57,919
    
    
    
    (5,321
    )
    
    
    114,872Operating loss
    
    
    (2,660
    )
    
    
    (1,474
    )
    
    
    (3,152
    )
    
    
    
    
    
    
    (7,286
    )Other income (expense):Equity in loss of consolidated subsidiaries
    
    
    (570
    )
    
    
    
    
    
    
    
    
    
    
    570
    
    
    
    Interest  net
    
    
    (1,363
    )
    
    
    (148
    )
    
    
    (125
    )
    
    
    
    
    
    
    (1,636
    )Other  net
    
    
    
    
    
    
    177
    
    
    
    (51
    )
    
    
    
    
    
    
    126Income (loss) from continuing operations before
income taxes
    
    
    (4,593
    )
    
    
    (1,445
    )
    
    
    (3,328
    )
    
    
    570
    
    
    
    (8,796
    )Benefit for income taxes
    
    
    
    
    
    
    (51
    )
    
    
    (204
    )
    
    
    
    
    
    
    (255
    )Net income (loss) from continuing operations
    
    
    (4,593
    )
    
    
    (1,394
    )
    
    
    (3,124
    )
    
    
    570
    
    
    
    (8,541
    )Income from
discontinued operations, net of
provision for income taxes
    
    
    
    
    
    
    1,704
    
    
    
    2,244
    
    
    
    
    
    
    
    3,948Net income (loss)
    
    $
    (4,593
    )
    
    $
    310
    
    
    $
    (880
    )
    
    $
    570
    
    
    $
    (4,593
    )
 29




---



##### 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
 Three Months Ended March 31, 2007WUSAIParent
    
    
    (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in) operating activities of
continuing operations
    
    $
    (4,689
    )
    
    $
    (4,303
    )
    
    $
    1,652
    
    
    $
    
    
    
    $
    (7,340
    )Net cash used in operating activities of discontinued operations
    
    
    (2,310
    )
    
    
    (894
    )
    
    
    (6,446
    )
    
    
    
    
    
    
    (9,650
    )Cash used in operating activities
    
    
    (6,999
    )
    
    
    (5,197
    )
    
    
    (4,794
    )
    
    
    
    
    
    
    (16,990
    )Cash flows from investing activities:Proceeds from sale of discontinued operations, net
    
    
    130,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,568Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    46Purchases of property, plant and equipment
    
    
    
    
    
    
    (297
    )
    
    
    (1,529
    )
    
    
    
    
    
    
    (1,826
    )Cash provided by (used in) investing activities of
continuing operations
    
    
    130,568
    
    
    
    (297
    )
    
    
    (1,483
    )
    
    
    
    
    
    
    128,788Cash provided by investing activities of discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) investing activities
    
    
    130,568
    
    
    
    (297
    )
    
    
    (1,483
    )
    
    
    
    
    
    
    128,788Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    510
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    510Repayment of bank and other debt
    
    
    
    
    
    
    (3,247
    )
    
    
    (14
    )
    
    
    
    
    
    
    (3,261
    )Payments on capital leases
    
    
    
    
    
    
    (676
    )
    
    
    
    
    
    
    
    
    
    
    (676
    )Costs of debt issuance and other
    
    
    (508
    )
    
    
    (250
    )
    
    
    
    
    
    
    
    
    
    
    (758
    )Advances from (payments to) parent/affiliates
    
    
    (17,141
    )
    
    
    4,064
    
    
    
    13,077
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities of
continuing operations
    
    
    (17,139
    )
    
    
    (109
    )
    
    
    13,063
    
    
    
    
    
    
    
    (4,185
    )Cash provided by financing activities of discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (17,139
    )
    
    
    (109
    )
    
    
    13,063
    
    
    
    
    
    
    
    (4,185
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    
    
    
    
    183Cash provided by (used in) all activities
    
    $
    106,430
    
    
    $
    (5,603
    )
    
    $
    6,969
    
    
    $
    
    
    
    $
    107,796
 30




---



##### 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
 Three Months Ended March 31, 2006WUSAIParent
    
    
    (Guarantor)
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash flows provided by (used in) operating activities
of continuing operations
    
    $
    (2,526
    )
    
    $
    4,332
    
    
    $
    (3,540
    )
    
    $
    
    
    
    $
    (1,734
    )Net cash used in operating activities of discontinued operations
    
    
    
    
    
    
    (1,571
    )
    
    
    (25,713
    )
    
    
    
    
    
    
    (27,284
    )Cash provided by (used in) operating activities
    
    
    (2,526
    )
    
    
    2,761
    
    
    
    (29,253
    )
    
    
    
    
    
    
    (29,018
    )Cash flows from investing activities:(Purchase) disposal of property, plant and equipment
    
    
    
    
    
    
    (4,432
    )
    
    
    1,077
    
    
    
    
    
    
    
    (3,355
    )Proceeds from sale of discontinued operations
    
    
    
    
    
    
    25,082
    
    
    
    
    
    
    
    
    
    
    
    25,082Increase in restricted cash
    
    
    (4,064
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,064
    )Cash provided by (used) in investing activities of
continuing operations
    
    
    (4,064
    )
    
    
    20,650
    
    
    
    1,077
    
    
    
    
    
    
    
    17,663Cash used in investing activities of discontinued
operations
    
    
    
    
    
    
    
    
    
    
    (2,150
    )
    
    
    
    
    
    
    (2,150
    )Cash used in investing activities
    
    
    (4,064
    )
    
    
    20,650
    
    
    
    (1,073
    )
    
    
    
    
    
    
    15,513Cash flows from financing activities:Proceeds from issuance of convertible debt
    
    
    19,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,500Proceeds from issuance of common stock
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167Advances from (repayments to) parent/affiliates
    
    
    (9,259
    )
    
    
    (20,120
    )
    
    
    29,379
    
    
    
    
    
    
    
    Repayment of bank and other debt
    
    
    
    
    
    
    (1,711
    )
    
    
    (1
    )
    
    
    
    
    
    
    (1,712
    )Costs of debt issuance and other
    
    
    (3,374
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,374
    )Cash provided by (used in) financing activities of
continuing operations
    
    
    7,034
    
    
    
    (21,831
    )
    
    
    29,378
    
    
    
    
    
    
    
    14,581Cash provided by financing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    7,034
    
    
    
    (21,831
    )
    
    
    29,378
    
    
    
    
    
    
    
    14,581Effect of exchange rate changes on cash on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    40Cash provided by (used in) all activities
    
    $
    444
    
    
    $
    1,580
    
    
    $
    (908
    )
    
    $
    
    
    
    $
    1,116
 31




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##### 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
     Construction Engineering EPC US & Canada International EPC
  32




---



##### Table of Contents



Discontinued Operations
     33




---



##### Table of Contents



Significant Business Developments
  Financial Summary
  Construction
      CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  34




---



##### Table of Contents



OTHER FINANCIAL MEASURES
 EBITDA
   Three Months Ended March 31,2007
    
    
    2006Net loss from continuing operations
    
    $
    (3,339
    )
    
    $
    (8,541
    )Interest, net
    
    
    890
    
    
    
    1,636Provision (benefit) for income taxes
    
    
    255
    
    
    
    (255
    )Depreciation and amortization
    
    
    3,456
    
    
    
    3,005EBITDA from continuing operations
    
    $
    1,262
    
    
    $
    (4,155
    )
 Backlog
    RESULTS OF OPERATIONS
   35




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##### Table of Contents



Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
 Contract Revenue
 Construction
 Three Months Ended March 31,Percent2007
    
    
    2006
    
    
    Increase
    
    
    ChangeConstruction
    
    $
    170,705
    
    
    $
    79,147
    
    
    $
    91,558
    
    
    
    115.7
    %Engineering
    
    
    19,655
    
    
    
    15,481
    
    
    
    4,174
    
    
    
    27.0
    %EPC
    
    
    16,349
    
    
    
    12,958
    
    
    
    3,391
    
    
    
    26.2
    %Total
    
    $
    206,709
    
    
    $
    107,586
    
    
    $
    99,123
    
    
    
    92.1
    %
 Construction
 Engineering
 EPC
 Contract Income
  Three Months Ended March 31,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    Percent2007
    
    
    Revenue
    
    
    2006
    
    
    Revenue
    
    
    Increase
    
    
    ChangeConstruction
    
    $
    5,701
    
    
    
    3.3
    %
    
    $
    2,439
    
    
    
    3.1
    %
    
    $
    3,262
    
    
    
    133.7
    %Engineering
    
    
    4,066
    
    
    
    20.7
    %
    
    
    1,910
    
    
    
    12.3
    %
    
    
    2,156
    
    
    
    112.9
    %EPC
    
    
    3,110
    
    
    
    19.0
    %
    
    
    1,777
    
    
    
    13.7
    %
    
    
    1,333
    
    
    
    75.0
    %Total
    
    $
    12,877
    
    
    
    6.2
    %
    
    $
    6,126
    
    
    
    5.7
    %
    
    $
    6,751
    
    
    
    110.2
    %
 Construction
 Engineering
 EPC
 Other Operating Expenses
  36




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##### Table of Contents



Non-Operating Items
 Interest  net
 Other  net
 Income Tax
 LIQUIDITY AND CAPITAL RESOURCES
 Liquidity
  Capital Requirements
  Working Capital
   2006 Credit Facility
  37




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##### Table of Contents



Private Placement
   6.5% Senior Convertible Notes
   2.75% Convertible Senior Notes
   2004 Credit Facility
  38




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##### Table of Contents



Contractual Obligations
   NEW ACCOUNTING PRONOUNCEMENTS
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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;
    
    failure to obtain the timely award of one or more projects;
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
    
    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;
    
    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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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 4. CONTROLS AND PROCEDURES
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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
  (d)Maximum(c)
    
    
    Number (orTotal
    
    
    ApproximateNumber
    
    
    Dollar Value)Of Shares
    
    
    Of SharesPurchased
    
    
    That May(a)
    
    
    (b)
    
    
    As Part Of
    
    
    Yet BeTotal
    
    
    Average
    
    
    Publicly
    
    
    PurchasedNumber
    
    
    Price
    
    
    Announced
    
    
    Under theOf Shares
    
    
    Paid Per
    
    
    Plans or
    
    
    Plans orPurchased
    
    
    Share
    
    
    Programs
    
    
    ProgramsJanuary 1, 2007  January 31, 2007
    
    
    25,853
    (1)
    
    $
    19.09
    (2)
    
    
    
    
    
    
    February 1, 2007  February 28, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1, 2007  March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    25,853
    
    
    $
    19.09
    
    
    
    
    
    
    
    
 
 1)
    
    Represents 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
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
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Item 6. Exhibits
   10.1
    
    Amendment Number 1 to Willbros Group, Inc. 2006 Director Restricted Stock Plan dated January
9, 2007 (filed as Exhibit 10.20 to our annual report on Form 10-K for the year ended December
31, 2006, filed March 14, 2007).10.2
    
    Share Purchase Agreement by and between us and Ascot Offshore Nigeria Limited dated as of
February 7, 2007 (filed as Exhibit 10.40 to our annual report on Form 10-K for the year ended
December 31, 2006, filed March 14, 2007).10.3
    
    Indemnity Agreement between and among us, Willbros International, Inc., Ascot Offshore
Nigeria Limited and Berkeley Group plc (filed as Exhibit 10.41 to our annual report on Form
10-K for the year ended December 31, 2006, filed March 14, 2007).10.4
    
    Management Incentive Compensation Program (filed as Exhibit 10.1 to our current report on
Form 8-K dated March 1, 2007, filed March 7, 2007).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: May 9, 2007
    By:
    /s/ Van A. WelchVan A. WelchSenior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer) 46




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EXHIBIT INDEX
  ExhibitNumber
    
    Description10.1
    
    Amendment Number 1 to Willbros Group, Inc. 2006 Director Restricted Stock Plan dated
January 9, 2007 (filed as Exhibit 10.20 to our annual report on Form 10-K for the year
ended December 31, 2006, filed March 14, 2007).10.2
    
    Share Purchase Agreement by and between us and Ascot Offshore Nigeria Limited dated as
of February 7, 2007 (filed as Exhibit 10.40 to our annual report on Form 10-K for the year
ended December 31, 2006, filed March 14, 2007).10.3
    
    Indemnity Agreement between and among us, Willbros International, Inc., Ascot Offshore
Nigeria Limited and Berkeley Group plc (filed as Exhibit 10.41 to our annual report on Form
10-K for the year ended December 31, 2006, filed March 14, 2007).10.4
    
    Management Incentive Compensation Program (filed as Exhibit 10.1 to our current report
on Form 8-K dated March 1, 2007, filed March 7, 2007).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.
 47