UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934.

                  FOR THE QUARTERLY PERIOD ENDED JUNE 25, 1999

                                       OR

              [ ] 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 1-286-2


                           FOSTER WHEELER CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          NEW YORK                                               13-1855904
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


PERRYVILLE CORPORATE PARK, CLINTON, N. J.                          08809-4000
-----------------------------------------                         ------------
(Address of principal executive offices)                           (Zip Code)


Registrant's telephone number, including area code:    (908)-730-4000
                                                        -------------


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes (X) No ( )

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 40,725,887
shares of the Corporation's common stock ($1.00 par value) were
outstanding as of June 25, 1999.




<PAGE>



                           FOSTER WHEELER CORPORATION


                                      INDEX

Part I    Financial Information:

      Item 1 - Financial Statements:

          Condensed Consolidated Balance Sheet at June 25, 1999 and
          December 25, 1998

          Condensed Consolidated Statement of Earnings and
          Comprehensive Income Three and Six Months Ended
          June 25, 1999 and June 26, 1998

          Condensed Consolidated Statement of Cash Flows
          Six Months Ended June 25, 1999 and June 26, 1998

          Notes to Condensed Consolidated Financial Statements


      Item 2 - Management's Discussion and Analysis of Financial Condition
               and Results of Operations

Part II        Other Information:

      Item 1 - Legal Proceedings


      Item 6 - Exhibits and Reports on Form 8-K

Signatures



                                       1




<PAGE>


PART I    FINANCIAL INFORMATION
ITEM 1 -  FINANCIAL STATEMENTS

                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            (In Thousands of Dollars)
<TABLE>
<CAPTION>


                                                           June 25, 1999   December 25,
                                                            (UNAUDITED)        1998 *
                                                           -------------   ------------
ASSETS
CURRENT ASSETS:
<S>                                                        <C>            <C>
Cash and cash equivalents ..............................   $   171,535    $   180,068
Short-term investments .................................        34,094         61,223
Accounts and notes receivable ..........................       849,724        857,005
Contracts in process and inventories ...................       458,179        478,481
Prepaid, deferred and refundable income taxes ..........        60,214         66,068
Prepaid expenses .......................................        20,757         29,997
                                                           -----------    -----------
     Total current assets ..............................     1,594,503      1,672,842
                                                           -----------    -----------
Land, buildings and equipment ..........................     1,042,081      1,015,795
Less accumulated depreciation ..........................       351,331        339,009
                                                           -----------    -----------
     Net book value ....................................       690,750        676,786
                                                           -----------    -----------
Notes and accounts receivable - long-term ..............       102,951        103,612
Investments and advances ...............................       105,490         95,827
Intangible assets, net .................................       277,039        285,245
Prepaid pension cost and benefits ......................       193,782        196,812
Other, including insurance recoveries ..................       277,723        286,886
Deferred income taxes ..................................         4,627          4,291
                                                           -----------    -----------

         TOTAL ASSETS ..................................   $ 3,246,865    $ 3,322,301
                                                           ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments on long-term debt .................   $    19,892    $    19,751
Bank loans .............................................       173,688        107,051
Accounts payable and accrued expenses ..................       641,057        718,337
Estimated costs to complete long-term contracts ........       531,381        563,271
Advance payments by customers ..........................        51,553         56,630
Income taxes ...........................................        12,376         26,626
                                                           -----------    -----------
     Total current liabilities .........................     1,429,947      1,491,666
Corporate and other debt less current installments .....       362,810        540,827
Special-purpose project debt less current installments .       312,928        294,898
Deferred income taxes ..................................        81,373         85,484
Postretirement and other employee benefits other than
     pensions ..........................................       163,382        168,799
Other long-term liabilities and minority interest ......       173,015        168,509
Mandatorily Redeemable Preferred Securities of
     Subsidiary Trust Holding Solely Junior Subordinated
     Deferrable Interest Debentures ....................       175,000           --
                                                           -----------    -----------
         TOTAL LIABILITIES .............................     2,698,455      2,750,183
                                                           -----------    -----------

STOCKHOLDERS' EQUITY:
Common stock ...........................................        40,748         40,748
Paid-in capital ........................................       201,057        201,158
Retained earnings ......................................       380,839        377,147
Accumulated other comprehensive loss ...................       (73,924)       (46,349)
                                                           -----------    -----------
                                                               548,720        572,704
Less cost of treasury stock ............................           310            586
                                                           -----------    -----------
         TOTAL STOCKHOLDERS' EQUITY ....................       548,410        572,118
                                                           -----------    -----------
         TOTAL LIABILITIES AND
              STOCKHOLDERS' EQUITY .....................   $ 3,246,865    $ 3,322,301
                                                           ===========    ===========

</TABLE>


See notes to financial statements.

* Reclassified to conform to 1999 presentation, see Note 1.



                                       2


<PAGE>



                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME
               (In Thousands of Dollars, Except Per Share Amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                           THREE MONTHS ENDED               SIX MONTHS ENDED
                                      JUNE 25, 1999   JUNE 26, 1998   JUNE 25, 1999  JUNE 26, 1998
                                      -------------   -------------   -------------  -------------
Revenues:
<S>                                   <C>             <C>             <C>             <C>
     Operating revenues               $    854,958    $  1,033,825    $  1,853,728    $  2,061,786
     Other income                           18,805          16,794          38,013          26,587
                                      ------------    ------------    ------------    ------------

     Total revenues                        873,763       1,050,619       1,891,741       2,088,373
                                      ------------    ------------    ------------    ------------

Cost and expenses:
     Cost of operating revenues            788,295         949,674       1,701,524       1,891,508
     Selling, general and adminis-
        trative expenses                    59,043          60,485         114,255         116,899
     Other deductions/minority
        interest                            11,455          18,920          36,177          37,202
     Dividend on preferred security
        of subsidiary trust                  4,025            --             7,306            --
                                      ------------    ------------    ------------    ------------

     Total costs and expenses              862,818       1,029,079       1,859,262       2,045,609
                                      ------------    ------------    ------------    ------------

Earnings before income taxes                10,945          21,540          32,479          42,764
Provision for income taxes                   5,560           8,695          11,691          16,634
                                      ------------    ------------    ------------    ------------

Net earnings                                 5,385          12,845          20,788          26,130

Other comprehensive loss:
     Foreign currency translation
       adjustment                          (12,712)         (8,076)        (27,575)        (15,868)
                                      ------------    ------------    ------------    ------------

Comprehensive (loss)/income           $     (7,327)   $      4,769    $     (6,787)   $     10,262
                                      ============    ============    ============    ============

Earnings per share:
     Basic                                   $.13            $.32            $.51             $.64
                                             ====            ====            ====             ====
     Diluted:                                $.13            $.32            $.51             $.64
                                             ====            ====            ====             ====

Shares outstanding:
     Basic                              40,732,135      40,736,754      40,730,985      40,735,809
     Diluted                                10,621           7,463             116           7,300
                                      ------------    ------------    ------------    ------------

     Total diluted                      40,742,756      40,744,217      40,731,101      40,743,109
                                      ============    ============    ============    ============

Cash dividends paid per
     common share                             $.21            $.21           $.42             $.42
                                              ====            ====           ====             ====

</TABLE>



See notes to financial statements.


                                       3


<PAGE>


                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                            SIX MONTHS ENDED
                                                                     JUNE 25, 1999  JUNE 26, 1998
                                                                     -------------  -------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                     <C>          <C>
Net earnings .........................................................  $  20,788    $  26,130
Adjustments to reconcile net earnings
     to cash flows from operating activities:
Depreciation and amortization ........................................     30,213       29,746
Noncurrent deferred tax ..............................................     (2,771)       5,876
Equity earnings, net of dividends ....................................     (7,282)      (3,283)
Other ................................................................     (6,675)      (3,682)
Changes in assets and liabilities:
Receivables ..........................................................    (41,016)      35,291
Contracts in process and inventories .................................      7,873      (65,437)
Accounts payable and accrued expenses ................................    (34,726)     (30,562)
Estimated costs to complete long-term contracts ......................     (5,758)     (64,897)
Advance payments by customers ........................................     (2,527)       9,305
Income taxes .........................................................    (11,913)       1,775
Other assets and liabilities .........................................      3,175         (910)
                                                                        ---------    ---------
NET CASH USED BY OPERATING ACTIVITIES ................................    (50,619)     (60,648)
                                                                        ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .................................................    (59,730)     (58,404)
Proceeds from sale of properties .....................................      2,082        2,225
Decrease/(increase) in investments and advances ......................     16,246       (5,201)
Decrease in short-term investments ...................................     26,884       21,351
Partnership distributions ............................................     (4,385)      (4,256)
                                                                        ---------    ---------
NET CASH USED BY INVESTING ACTIVITIES ................................    (18,903)     (44,285)
                                                                        ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to stockholders ............................................    (17,096)     (17,101)
Proceeds from the exercise of stock options ..........................       --             51
Repurchase of common stock ...........................................       (860)        --
Mandatorily Redeemable Preferred Securities of
     Subsidiary Trust Holdings Solely Junior Subordinated
     Deferrable Interest Debentures ..................................    169,178         --
Increase in short-term debt ..........................................     74,201       28,337
Proceeds from long-term debt .........................................     24,470       83,288
Repayment of long-term debt ..........................................   (174,348)      (9,403)
                                                                        ---------    ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ............................     75,545       85,172
                                                                        ---------    ---------

Effect of exchange rate changes on cash and cash equivalents .........    (14,556)      (3,274)
                                                                        ---------    ---------

DECREASE IN CASH AND CASH EQUIVALENTS ................................     (8,533)     (23,035)
Cash and cash equivalents at beginning of year .......................    180,068      167,417
                                                                        ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD ...........................  $ 171,535    $ 144,382
                                                                        =========    =========

Cash paid during period:
Interest (net of amount capitalized) .................................  $  29,945    $  20,783
Income taxes .........................................................  $   9,541    $  10,740


</TABLE>

See notes to financial statements.


                                       4


<PAGE>



                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


1.       The condensed consolidated balance sheet as of June 25, 1999, and the
         related condensed consolidated statements of earnings and comprehensive
         income and cash flows for the three and six month periods ended June
         25, 1999 and June 26, 1998 are unaudited. In the opinion of management,
         all adjustments necessary for a fair presentation of such financial
         statements have been included. Such adjustments only consisted of
         normal recurring items. Interim results are not necessarily indicative
         of results for a full year.

         The financial statements and notes are presented in accordance with
         this Form 10-Q and do not contain certain information included in
         Foster Wheeler Corporation's Annual Report on Form 10-K for the fiscal
         year ended December 25, 1998 filed with the Securities and Exchange
         Commission on March 18, 1999. The Condensed Consolidated Balance Sheet
         as of December 25, 1998 has been derived from the audited Consolidated
         Balance Sheet included in the 1998 Annual Report on Form 10-K. A
         summary of Foster Wheeler Corporation's significant accounting policies
         is presented on pages 27, 28 and 29 (not shown) of its 1998 Annual
         Report on Form 10-K. Users of financial information produced for
         interim periods are encouraged to refer to the footnotes contained in
         the 1998 Annual Report on Form 10-K when reviewing interim financial
         results. There has been no material change in the accounting policies
         followed by Foster Wheeler Corporation (hereinafter referred to as
         "Foster Wheeler" or the "Corporation") during the first six months of
         1999.

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and revenues and expenses during the
         period reported. Actual results could differ from those estimates.
         Significant estimates are used when accounting for long-term contracts
         including customer and vendor claims, depreciation, employee benefit
         plans, taxes, and contingencies, among others.

         In March of 1999, the Corporation reflected its investment in a joint
         venture in Chile on the equity method of accounting. The December 1998
         balance sheet has been reclassified to conform to the 1999
         presentation. This change had no impact on the June and the December
         1998 Consolidated Statements of Earnings and Comprehensive Income. The
         assets and liabilities of the joint venture included in the December
         balance sheet were as follows: total assets $242,662, total liabilities
         $182,225 and net assets $60,437.

2.       In the ordinary course of business, the Corporation and its
         subsidiaries enter into contracts providing for assessment of damages
         for nonperformance or delays in completion. Suits and claims have been
         or may be brought against the Corporation by customers alleging
         deficiencies in either equipment design or plant construction. Based on
         its knowledge of the facts and circumstances relating to the
         Corporation's liabilities, if any, and to its insurance coverage,
         management of the Corporation believes that the disposition of such
         suits will not result in charges against assets or earnings materially
         in excess of amounts previously provided in the accounts.


                                       5


<PAGE>


         The Corporation and its subsidiaries, along with many other companies,
         are codefendants in numerous lawsuits pending in the United States.
         Plaintiffs claim damages for personal injury alleged to have arisen
         from exposure to or use of asbestos in connection with work performed
         by the Corporation and its subsidiaries during the 1970s and prior. As
         of June 25, 1999, there were approximately 72,100 claims pending.
         During 1999, approximately 16,400 new claims were filed and
         approximately 6,600 were either settled or dismissed without payment.
         The Corporation has agreements with insurance carriers covering
         significantly more than a majority of the potential costs relating to
         these exposures. The Corporation has recorded an asset relating to the
         probable insurance recoveries and a liability relating to probable
         losses. These assets and liabilities were estimated based on historical
         data developed in conjunction with outside experts. Management of the
         Corporation has carefully considered the financial viability and legal
         obligations of its insurance carriers and has concluded that except for
         those insurers that have become or may become insolvent, the insurers
         will continue to adequately fund claims and defense costs relating to
         asbestos litigation.

         In 1997, the United States Supreme Court effectively invalidated New
         Jersey's long-standing municipal solid waste flow rules and
         regulations. The immediate effect was to eliminate the guaranteed
         supply of municipal solid waste to the Camden County Waste-to-Energy
         Project (the "Project") with its corresponding tipping fee revenue. As
         a result, tipping fees have been reduced to market rate in order to
         provide a steady supply of fuel to the plant. Those market-based
         revenues are not expected to be sufficient to cover the operating
         expenses and to service the debt on outstanding bonds that were issued
         to construct the plant and to acquire a landfill for Camden County's
         use. Although the debt is reflected in the consolidated financial
         statements of the Corporation the bonds were issued by the Pollution
         Control Financing Authority of Camden County. This debt is
         collateralized by a pledge of certain revenues and assets of the
         project but not the plant. The Corporation's obligation is to fund the
         debt to the extent the project generates positive cash flows. The
         Corporation has filed suit against the involved parties, seeking among
         other things to void the applicable contracts and agreements governing
         the Project. Pending outcome of the litigation and the results of
         legislative initiatives in New Jersey to resolve the issue, management
         believes that the plant will continue to operate at full capacity while
         receiving market rates for waste disposal. At this time, management
         cannot determine the ultimate outcome and its effect on the Project.

         In 1994, the Corporation entered into a lease agreement for a
         1,600-ton-per-day recycling and waste-to-energy plant located in
         Robbins, Illinois (the "Robbins Facility"), which went into commercial
         operation in January 1997. The terms of the agreement are to lease the
         facility under a long-term operating lease for 32 years. As a result of
         the partial repeal of the Illinois Retail Rate Law and increased
         operating costs, the facility is not generating cash flows sufficient
         to cover the required lease payments. Due to the limited liability
         project structure, annual lease expense will be the aggregate of (1)
         the annual amortization of prepaid lease cost over the term of the
         lease, (2) amounts due in accordance with the terms of the lease
         agreement to the extent of cash flows generated from operations (before
         lease expense) and (3) the amounts funded under the corporate
         guarantees up to the total of $79,600. These guarantees are estimated
         to be paid out as follows: $5,400 in 1999, $13,100 for 2000, $14,300 in
         2001 and the balance in 2002 and thereafter. Such estimates depend upon
         the actual results of the project and are subject to change if the
         agreement with bondholders as announced on July 27, 1999 is finalized
         (see "Subsequent Events", Note 13, for details).

         The ultimate legal and financial liability of the Corporation with
         respect to all claims, lawsuits and proceedings cannot be estimated
         with certainty. As additional information concerning the estimates used
         by the Corporation becomes known, the Corporation reassesses its
         position both with respect to gain contingencies and accrued
         liabilities and other potential exposures. Estimates that are
         particularly sensitive to future change relate to legal matters, which
         are subject to change as events evolve and as additional information
         becomes available during the administration and litigation process.


                                       6


<PAGE>

3.       The Corporation maintains two revolving credit agreements with a
         syndicate of banks. One is a short-term revolving credit agreement of
         $90,000 with a maturity of 364 days and the second is a $270,000
         revolving credit agreement with a maturity of four years (collectively,
         the "Revolving Credit Agreements"). These Revolving Credit Agreements
         require, among other things, the maintenance of a maximum Consolidated
         Leverage Ratio and a minimum Consolidated Fixed Charges Coverage Ratio.
         As of June 25, 1999, the Corporation was in compliance with both of
         these provisions; however, if the charge relating to the Robbins
         Facility discussed below in Note 13 is taken in 1999, the Corporation
         will be required to obtain a waiver from the lenders under the
         Revolving Credit Agreements.

         On January 13, 1999, FW Preferred Capital Trust I, a Delaware business
         trust, issued $175,000 in Trust Preferred Securities. These Trust
         Preferred Securities are entitled to receive cumulative cash
         distributions at an annual rate of 9.0%. Distributions will be paid
         quarterly in arrears on April 15, July 15, October 15 and January 15 of
         each year, beginning April 15, 1999. The maturity date is January 15,
         2029. Foster Wheeler can redeem these Trust Preferred Securities on or
         after January 15, 2004. The Corporation has a total of $125,000 that
         has not been issued under its existing shelf registration statement.


4.       A total of 4,355,528 shares of common stock were reserved for issuance
         under the stock option plans; of this total 1,849,916 were not under
         option.


5.       Basic per share data has been computed based on the weighted average
         number of shares of common stock outstanding. Diluted per share data
         has been computed on the basic plus the dilution of stock options. In
         the second quarter of 1999, the Corporation adopted a "Directors
         Deferred Compensation and Stock Award Plan." Each non-employee director
         is credited initially with units representing 1,000 shares of the
         Corporation's common stock and 300 shares annually. In the second
         quarter 9,000 units were issued and are included in the calculation of
         basic earnings per share data.





6.       Interest income and cost for the following periods are:

                                   THREE MONTHS ENDED    SIX MONTHS ENDED
                                   ------------------    ----------------
                                  JUNE 25,    JUNE 26,  JUNE 25,  JUNE 26,
                                   1999        1998      1999      1998
                                   ----        ----      ----      ----

        Interest Income            $ 2,093   $ 5,368   $ 5,391   $11,369
                                   =======   =======   =======   =======
        Interest Cost              $18,293   $18,442   $36,846   $35,311
                                   =======   =======   =======   =======


         Included in interest cost is interest capitalized on self-constructed
         assets for the three and the six months ended June 25, 1999 of $1,439
         and $2,061, respectively, compared to $2,926 and $5,790 for the
         comparable periods in 1998. Included in interest cost is dividends on
         Trust Preferred Securities which for the three and six months ended
         June 25, 1999, amounted to $4,025 and $7,306, respectively.


                                       7


<PAGE>




7.       The Financial Accounting Standards Board released in June 1998,
         Statement of Financial Accounting Standards No. 133, "Accounting for
         Derivative Instruments and Hedging Activities." This Statement
         addresses the accounting for derivative instruments including certain
         derivative instruments embedded in other contracts and for hedging
         activities. The Corporation is currently assessing the impact of
         adoption of this new Statement. The effective date of this Statement
         has been deferred by the issuance of Statement of Financial Accounting
         Standards No. 137 until the fiscal year beginning after June 15, 2000.


         In the second quarter of 1998, the Accounting Standard Executive
         Committee of the AICPA issued Statement of Position 98-5, "Reporting on
         the Costs of Start-up Activities." This statement provides guidance on
         financial reporting of start-up costs and organizational costs. This
         Statement of Position is effective for financial statements for fiscal
         years beginning after December 15, 1998. This Statement of Position
         requires start-up costs to be expensed as incurred. The Corporation has
         adopted this Statement of Position in the first quarter of 1999 without
         a material impact on the financial results of the Corporation.


8.       In the third quarter 1998, a subsidiary of the Corporation entered into
         a three year agreement with a financial institution whereby the
         subsidiary would sell an undivided interest in a designated pool of
         qualified accounts receivable. Under the terms of the agreement, new
         receivables are added to the pool as collections reduce previously sold
         accounts receivable. The credit risk of uncollectible accounts
         receivable has been transferred to the purchaser. The Corporation
         services, administers and collects the receivables on behalf of the
         purchaser. Fees payable to the purchaser under this agreement are
         equivalent to rates afforded high quality commercial paper issuers plus
         certain administrative expenses and are included in other deductions in
         the Consolidated Statement of Earnings. The agreement contains certain
         covenants and provides for various events of termination. At June 25,
         1999, $40,000 in receivables were sold under the agreement and are
         therefore not reflected in the accounts receivable balance in the
         Condensed Consolidated Balance Sheet.


                                       8




<PAGE>




9.       Changes in equity for the six months ended June 25, 1999 were as
         follows:

                             (In Thousands of Dollars)
<TABLE>
<CAPTION>

                                                                                  ACCUMULATED
                                                                                     OTHER                                TOTAL
                                 COMMON STOCK          PAID-IN      RETAINED     COMPREHENSIVE        TREASURY STOCK   STOCKHOLDERS'
                            SHARES         AMOUNT      CAPITAL      EARNINGS         LOSS         SHARES       AMOUNT     EQUITY
                        ------------      --------     -------      --------   ----------------   ------      -------  ------------

Balance
<S>                      <C>          <C>           <C>           <C>          <C>              <C>       <C>           <C>
    December 25, 1998    40,747,668   $    40,748   $   201,158   $   377,147  $   (46,349)     (30,804)  $      (586)  $   572,118

Net income                                                             20,788                                                20,788

Dividends paid -
    common                                                            (17,096)                                              (17,096)

Purchase of
    treasury stock                                                                              (71,000)         (860)         (860)

Foreign currency
    translation
    adjustment                                                                      (27,575)                                (27,575)

Issued under
    incentive plan                                         (101)                                 80,023         1,136         1,035
                        -----------   -----------   -----------   -----------  -----------  -----------   -----------   -----------

Balance
    June 25, 1999        40,747,668   $    40,748   $   201,057   $   380,839  $   (73,924)     (21,781)  $      (310)  $   548,410
                        ===========   ===========   ===========   ===========  ===========  ===========   ===========   ===========

</TABLE>



                                       9

<PAGE>


10.       Major Business Groups

<TABLE>
<CAPTION>


FOR SIX MONTHS                        ENGINEERING                               CORPORATE AND
--------------                           AND         ENERGY        POWER         FINANCIAL
                            TOTAL    CONSTRUCTION   EQUIPMENT     SYSTEMS        SERVICE (1)
                            -----    ------------   ---------     -------        -----------
ENDED
-----
JUNE 25, 1999
-------------
<S>                      <C>          <C>          <C>          <C>           <C>
Revenues                 $1,891,741   $1,457,623   $  365,673   $   98,049    $  (29,604)
Interest expense(2)          34,785        2,794        6,407       13,905        11,679
Earnings/(loss) before
     income taxes            32,479       53,771       11,157       (6,310)      (26,139)
Income taxes/(benefit)       11,691       19,315        3,455       (1,904)       (9,175)
                         ----------   ----------   ----------   ----------    ----------

Net earnings/(loss)      $   20,788   $   34,456   $    7,702   $   (4,406)   $  (16,964)
                         ==========   ==========   ==========   ==========    ==========


ENDED
-----
JUNE 26, 1998
-------------
Revenues                 $2,088,373   $1,547,806   $  540,010   $   84,821    $  (84,264)
Interest expense             29,520        4,430        3,657       11,165        10,268
Earnings/(loss) before
     income taxes            42,764       48,030       22,407       (6,903)      (20,770)
Income taxes/(benefit)       16,634       17,507        8,251       (1,844)       (7,280)
                         ----------   ----------   ----------   ----------    ----------

Net earnings/(loss)      $   26,130   $   30,523   $   14,156   $   (5,059)   $  (13,490)
                         ==========   ==========   ==========   ==========    ==========

<FN>

(1) Includes intersegment eliminations
(2) Includes dividend on trust preferred securities.
</FN>
</TABLE>


                                       10


<PAGE>




11.      Consolidating Financial Information

         Separate financial statements and other disclosures with respect to the
         subsidiary guarantees have not been made because management has
         determined that such information is not material to holders of the
         Notes (as defined below).

         The following represents summarized consolidating financial information
         as of June 25, 1999 with respect to the financial position, and for the
         six months ended June 25, 1999, for results of operations and cash
         flows of the Corporation and its wholly-owned and majority-owned
         subsidiaries. In February 1999 Foster Wheeler USA Corporation, Foster
         Wheeler Energy Corporation and Foster Wheeler Energy International,
         Inc. issued guarantees in favor of the holders of the Corporation's 6
         3/4% Notes due November 15, 2005 (the "Notes"). Each of the guarantees
         is full and unconditional, and joint and several. The summarized
         consolidating financial information is presented in lieu of separate
         financial statements and other related disclosures of the wholly-owned
         subsidiary guarantors. None of the subsidiary guarantors are restricted
         from making distributions to the Corporation.


                      CONDENSED CONSOLIDATING BALANCE SHEET
                                  June 25, 1999

<TABLE>
<CAPTION>
                                                                GUARANTOR       NON-GUARANTOR
                  ASSETS                            FWC        SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS      CONSOLIDATED
                  ------                            ---        ------------     ------------    ------------      ------------

<S>                                             <C>              <C>             <C>              <C>              <C>
Current assets                                  $  483,293       $360,102        $1,595,227       $(844,119)       $1,594,503
Investment in subsidiaries                         898,920        311,320            51,044      (1,261,284)              -0-
Land, buildings & equipment (net)                   48,378         29,220           619,880          (6,728)          690,750
Notes and accounts receivable - long-term           92,753         11,416           475,575        (476,793)          102,951
Intangible assets (net)                                -0-         89,681           187,358             -0-           277,039
Other non-current assets                           264,677             23           225,023          91,899           581,622
                                                ----------       --------        ----------     -----------        ----------

TOTAL ASSETS                                    $1,788,021       $801,762        $3,154,107     $(2,497,025)       $3,246,865
                                                ==========       ========        ==========     ===========        ==========

    LIABILITIES & STOCKHOLDERS' EQUITY
    ----------------------------------

Current liabilities                             $  420,801       $342,686        $1,512,523     $  (846,063)       $1,429,947
Long-term debt                                     547,959         23,000           583,420        (478,641)          675,738
Other non-current liabilities                      270,851          6,142           224,015         (83,238)          417,770
Preferred trust securities                             -0-            -0-           175,000            -0-            175,000
                                                ----------       --------        ----------     -----------        ----------


TOTAL LIABILITIES                                1,239,611        371,828         2,494,958      (1,407,942)        2,698,455
TOTAL STOCKHOLDERS'
    EQUITY                                         548,410        429,934           659,149      (1,089,083)          548,410
                                                ----------       --------        ----------     -----------        ----------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                         $1,788,021       $801,762        $3,154,107     $(2,497,025)       $3,246,865
                                                ==========       ========        ==========     ============       ==========
</TABLE>


                                       11

<PAGE>


               CONDENSED CONSOLIDATING STATEMENT OF EARNINGS DATA

                     For the Six Months Ended June 25, 1999

<TABLE>
<CAPTION>

                                                                 GUARANTOR      NON-GUARANTOR
                                                    FWC        SUBSIDIARIES     SUBSIDIARIES        ELIMINATIONS     CONSOLIDATED
                                                    ---        ------------     ------------        ------------     ------------

<S>                                           <C>               <C>             <C>                  <C>              <C>
Revenues                                      $   15,639        $365,033        $1,679,486           $(168,417)       $1,891,741
Cost of operating revenues                           -0-         351,242         1,489,833            (139,551)        1,701,524
Selling, general and administrative,
  other deductions and minority
  interests                                       37,899          24,504           124,201             (28,866)          157,738


Equity in net earnings of subsidiaries            35,340           7,316               -0-             (42,656)              -0-
                                              ----------        --------        ----------           ---------        ----------


Earnings before income taxes                      13,080         (3,397)            65,452             (42,656)           32,479
Provisions for income taxes                      (7,708)         (4,532)            23,931                 -0-            11,691
                                              ----------        --------        ----------           ---------        ----------

Net earnings                                  $  20,788        $  1,135         $   41,521           $ (42,656)       $   20,788
                                              =========        ========         ==========           =========        ==========
</TABLE>


                                       12




<PAGE>

              CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW DATA

                     For the Six Months Ended June 25, 1999

<TABLE>
<CAPTION>

                                                     GUARANTOR    NON-GUARANTOR
                                             FWC    SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                             ---    ------------  ------------- ------------  ------------


<S>                                      <C>          <C>          <C>          <C>          <C>
NET CASH (USED)/PROVIDED BY
   OPERATING ACTIVITIES                  $ (40,123)   $ (18,864)   $    (119)   $   8,487    $ (50,619)
                                         ---------    ---------    ---------    ---------    ---------


CASH FLOWS FROM INVESTING
   ACTIVITIES
Capital expenditures                                     (3,010)     (56,720)                  (59,730)
Proceeds from sale of properties                                       2,082                     2,082
Decrease/(increase) in investment            1,820                    16,439       (2,013)      16,246
   and advances
Decrease in short-term investments                                    26,884                    26,884
Other                                                       500       (4,885)                   (4,385)
                                         ---------    ---------    ---------    ---------    ---------
NET CASH PROVIDED/(USED) BY
   INVESTING ACTIVITIES                      1,820       (2,510)     (14,450)      (2,013)     (18,903)
                                         ---------    ---------    ---------    ---------    ---------

CASH FLOW FROM FINANCING
   ACTIVITIES
Dividends to Stockholders                  (17,096)                                            (17,096)
Issuance of trust preferred securities                               169,178                   169,178
Increase in short-term debt                 69,300                     4,901                    74,201
Proceeds from long-term debt                                          24,470                    24,470
Repayment of long-term debt               (170,000)                   (4,348)                 (174,348)
Other                                      143,829       18,011     (156,226)      (6,474)        (860)
                                         ---------    ---------    ---------    ---------    ---------
NET CASH PROVIDED/(USED) BY
   FINANCING ACTIVITIES                     26,033       18,011       37,975       (6,474)      75,545
                                         ---------    ---------    ---------    ---------    ---------
Effect of exchange rate changes on
   cash and cash equivalents                                         (14,556)                  (14,556)
Decrease in cash and cash equivalents      (12,270)      (3,363)       7,100                    (8,533)
Cash and cash equivalents, beginning
   of period                                13,720        6,552      159,796                   180,068
                                         ---------    ---------    ---------    ---------    ---------
Cash and cash equivalents, end of
   period                                $   1,450    $   3,189    $ 166,896    $     -0-    $ 171,535
                                         =========    =========    =========    =========    =========

</TABLE>


                                       13




<PAGE>



12.      The Corporation owns a non-controlling equity interest in three
         cogeneration projects; two of which are located in Italy and one in
         Chile. In addition, the Corporation owns an equity interest in a
         hydrogen producing plant in Venezuela. Following is summarized
         financial information for the Corporation's equity affiliates combined,
         as well as the Corporation's interest in the affiliates.

                                                      JUNE 25,      DECEMBER 25,
                                                       1999            1998
                                                    -------------   ------------
        BALANCE SHEET DATA:
        -------------------
        Current assets                               $ 87,554           $ 83,871
        Other assets (primarily buildings and
             equipment)                               508,884            541,507
        Current liabilities                            31,778             35,126
        Other liabilities (primarily long-term
             debt)                                    417,632            461,972
        Net assets                                    147,028            128,280

        INCOME STATEMENT DATA:
        ----------------------
        Total revenues                               $ 60,742
        Income before income taxes                     15,924
        Net earnings                                   16,882



         As of June 25, 1999, the Corporation's share of the net earnings and
         investment in the equity affiliates totaled $9,032 and $105,490,
         respectively. Dividends of $1,750 were received during the first six
         months of 1999. The Corporation has guaranteed certain performance
         obligations of such projects. The Corporation's obligations under such
         guarantees are approximately $1,500 per year for the three projects.
         The Corporation has provided a $10,000 debt service reserve letter of
         credit providing liquidity for debt service payments. No amounts have
         been drawn under the letter of credit. The earning results for the six
         months of 1998 were $1,173 for these operations.


13.      Subsequent Events: On July 27, 1999, the Corporation announced it had
         reached a preliminary agreement with holders of a majority of the
         principal amount of bonds issued in connection with the financing of
         the Robbins Facility. Under the agreement, the project will be
         restructured by, among other things, exchanging existing bonds for new
         bonds, selling the facility to a third-party owner/operator and
         allowing Foster Wheeler to exit from its operating role.

         Specific elements are that Foster Wheeler will:
         --    Provide subordinated guarantees on $113,000 aggregate principal
               amount of tax-exempt bonds to be issued by the Village of
               Robbins, Illinois, in exchange for a portion of the existing
               bonds, including $95,000 of amortizing 25-year bonds and $18,000
               of 10-year accretion bonds with interest paid at maturity;
         --    Pending sale of the facility, operate the facility for up to two
               years with no operational guarantees and full cost reimbursement;


                                       14


<PAGE>




         --    Pay in October 1999 approximately $5,400 of its existing $55,000
               support obligation (the remaining obligations under the $55,000
               support will be terminated upon consummation of the exit
               transaction and the issuance of the $113,000 of Foster Wheeler
               supported bonds);
         --    Continue to prosecute the retail rate litigation against various
               Illinois State officials, and,
         --    Cooperate with the bondholders in seeking a new third-party
               owner/operator for the facility.

         The transaction is subject to due diligence, requires third-party and
         bondholder approvals and execution of a definitive agreement. After the
         transaction is consummated, the Corporation does not expect to incur
         any further operating losses from the Robbins project.

         During the third quarter, assuming that a definitive agreement is
         executed, the Corporation will take a pretax charge of approximately
         $210,000. The charge will fully write off all existing obligations of
         Foster Wheeler related to the Robbins Resource Recovery Facility,
         including the prepaid lease expense, $20,000 of outstanding bonds
         issued in conjunction with the equity financing of the facility,
         transaction expenses and ongoing legal expenses associated with the
         Retail Rate Law litigation.

         COST REDUCTIONS

         The Corporation's continuing business strategy is to maintain focus on
         its core business segments in engineering and construction and energy
         equipment. In order to remain competitive in these segments while
         improving margins, the Corporation is reducing costs through staff
         reduction and closure of some smaller operating facilities. These
         changes include the reduction of approximately 1,600 permanent
         positions, including 300 overhead and other support positions from its
         worldwide workforce of 11,000. In addition, approximately 800 agency
         personnel within the Engineering & Construction Group will be reduced
         during the course of this year. The positions eliminated will include
         engineering, clerical, support staff and manufacturing personnel.

         The Corporation expects to take a pretax charge of approximately
         $35,000 in the third quarter as a result of implementation of this
         plan. At the end of July, the Corporation is approximately 35% complete
         with these reductions.

         DIVIDEND REDUCTION

         The Corporation's Board of Directors meeting held on July 27, 1999
         reduced the quarterly dividend to $0.06 per share from $0.21 per share,
         payable on September 15, 1999 to stockholders of record as of August
         16, 1999.


                                       15


<PAGE>


         ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                   (In Millions of Dollars, except per Share Amounts)

         The following is Management's Discussion and Analysis of certain
         significant factors that have affected the financial condition and
         results of operations of the Corporation for the periods indicated
         below. This discussion and analysis should be read in conjunction with
         the 1998 Annual Report on Form 10-K filed on March 18, 1999.

         RESULTS OF OPERATIONS

         THREE AND SIX MONTHS ENDED JUNE 25, 1999 COMPARED TO THE THREE AND
         SIX MONTHS ENDED JUNE 26, 1998

                                             CONSOLIDATED DATA

                                THREE MONTHS ENDED         SIX MONTHS ENDED
                                ------------------         ----------------
                               JUNE 25,     JUNE 26,      JUNE 25,    JUNE 26,
                                1999         1998          1999        1998
                             ----------   ----------   ----------   ----------

        Backlog              $  6,991.8   $  7,796.4   $  6,991.8   $  7,796.4
                             ==========   ==========   ==========   ==========
        New orders           $  1,059.4   $  1,369.7   $  1,969.9   $  2,818.6
                             ==========   ==========   ==========   ==========
        Revenues             $    873.7   $  1,050.7   $  1,891.7   $  2,088.4
                             ==========   ==========   ==========   ==========
        Net earnings         $      5.4   $     12.8   $     20.8   $     26.1
                             ==========   ==========   ==========   ==========

         The Corporation's consolidated backlog at June 25, 1999 totaled
         $6,991.8, which represented a decrease of 10% from the amount reported
         as of June 26, 1998. This decrease was due primarily to low level of
         new orders recorded in 1999 by the Engineering and Construction Group.
         The dollar amount of backlog is not necessarily indicative of the
         future earnings of the Corporation related to the performance of such
         work. The backlog of unfilled orders includes amounts based on signed
         contracts as well as agreed letters of intent which management has
         determined are likely to be performed. Although backlog represents only
         business which is considered firm, cancellations or scope adjustments
         may occur. Due to factors outside the Corporation's control, such as
         changes in project schedules, the Corporation cannot predict with
         certainty the portion of backlog not to be performed. Backlog is
         adjusted to reflect project cancellations, deferrals, sale of
         subsidiaries and revised project scope and cost. This adjustment for
         the six months ended June 25, 1999 was $277.7, compared with $146.5 for
         the six months ended June 26, 1998. Furthermore, the Corporation's
         future award prospects include several large-scale international
         projects and, because the large size and uncertain timing of these
         projects can create variability in the Corporation's contract awards,
         future award trends are difficult to predict.

         New orders awarded for the three and six months ended June 25, 1999
         were $1,059.4 and $1,969.9 compared to $1,369.7 and $2,818.6 for the
         periods ended June 26, 1998. Approximately 59% of new orders booked in
         the six months ended June 25, 1999 were for projects awarded to the
         Corporation's subsidiaries located outside the United States. Key
         countries and geographic areas contributing to new orders awarded for
         the six months ended June 25, 1999 were the United States, Europe, the
         Philippines, Malaysia and Eastern Europe.


                                       16

<PAGE>



         Operating revenues decreased in the three months ended June 25, 1999
         compared to the three months ended June 26, 1998 to $854.9 from
         $1,033.8. The most recent six month period reflects a decrease in
         operating revenue of $208.1 from $2,061.8 in 1998 to $1,853.7. The
         decrease in the Engineering and Construction Group for the three and
         six months of 1999 compared to the same periods for 1998 was $80.7 and
         $96.9, respectively. The Energy Equipment Group decreased for the three
         and six months of 1999 compared to 1998 by $103.1 and $175.2,
         respectively.

         Gross earnings, which are equal to operating revenue minus the cost of
         operating revenue decreased by $18.1 in the six months ended June 25,
         1999 as compared with the six months ended June 26, 1998 to $152.2 from
         $170.3. Gross earnings decreased by $17.5 in the three months ended
         June 25, 1999 as compared with the three months ended June 26, 1998 to
         $66.7 from $84.2. The decrease in gross earnings for the three and six
         month period for 1999 to 1998 can be attributed to the Energy Equipment
         Group and the Power Systems Group. (See "Engineering and Construction
         Group" and "Energy Equipment Group" below).

         Selling, general and administrative decreased by 2% in the six months
         ended June 25, 1999 as compared with the same period in 1998 from
         $116.9 to $114.3. Selling, general and administrative expense decreased
         by 2% in the three months ended June 25, 1999 as compared with the same
         period in 1998, from $60.5 to $59.0

         Other income in the six months ended June 25, 1999 as compared with
         June 26, 1998 increased to $38.0 from $26.6. Other income in the three
         months ended June 25, 1999 as compared with June 26, 1998 increased to
         $18.8 from $16.8. The increase for both the six and three months
         periods can be attributed to equity earnings offset by lower interest
         income.

         Other deductions and dividends on Trust Preferred for the six months
         ended June 25, 1999 were $5.4 higher than that reported in the six
         months ended June 26, 1998. The increase in other deductions can be
         attributed to higher interest expense. Interest expense for the six
         months of 1999 was $34.8 compared to $29.5 for the same period in 1998.

         The effective tax rate was 36.0% for the six months ended June 25,
         1999, as compared to 38.9% for the same period in 1998.

         Net earnings for the six months ended June 25, 1999 were $20.8 or $.51
         per share-basic compared to $26.1 or $.64 per share-basic for the six
         months ended June 26, 1998. Net earnings for the three months ended
         June 25, 1999 were $5.4 or $.13 per share-basic compared to $12.8 or
         $.32 per share-basic for the three months ended June 26, 1998.

         ENGINEERING AND CONSTRUCTION GROUP


                                 THREE MONTHS ENDED       SIX MONTHS ENDED
                                 ------------------       ----------------
                                JUNE 25,    JUNE 26,     JUNE 25,     JUNE 26,
                                 1999        1998          1999        1998
                             ----------   ----------   ----------   ----------

        Backlog              $  5,516.2   $  6,108.2   $  5,516.2   $  6,108.2
                             ==========   ==========   ==========   ==========
        New orders           $    745.1   $  1,148.3   $  1,490.7   $  2,408.0
                             ==========   ==========   ==========   ==========
        Operating revenues   $    642.8   $    723.5   $  1,433.3   $  1,530.2
                             ==========   ==========   ==========   ==========
        Gross earnings
          from operations    $     51.7   $     50.7   $    100.1   $    103.9
                             ==========   ==========   ==========   ==========


                                       17


<PAGE>


         The Engineering and Construction Group ("E&C Group"), had a backlog of
         $5,516.2 at June 25, 1999, which represented a decrease of $592.0 from
         June 26, 1998. New orders booked for the six month period ended June
         25, 1999 decreased by 38% compared with the period ended June 26, 1998.
         These decreases were primarily the result of the significant orders
         taken by the Continental European and United States operating
         subsidiaries in the first six months of 1998, which were not repeated
         in 1999. Operating revenues for the six month period ended June 25,
         1999 decreased 6% compared to the six month period ended June 26, 1998.
         Gross earnings from operations decreased by 4% for the six month period
         ended June 25, 1999, compared with the corresponding period ended June
         26, 1998. The gross earnings for the six month period were lower
         primarily due to the decrease reported by the Italian subsidiary
         ($12.1), which were offset by an increase in equity earnings of
         unconsolidated subsidiaries.

         ENERGY EQUIPMENT GROUP

                                 THREE MONTHS ENDED       SIX MONTHS ENDED
                                 ------------------       ----------------
                                JUNE 25,    JUNE 26,     JUNE 25,     JUNE 26,
                                 1999        1998          1999        1998
                             ----------   ----------   ----------   ----------

        Backlog              $  1,509.3   $  1,451.9   $  1,509.3   $  1,451.9
                             ==========   ==========   ==========   ==========
        New orders           $    452.2   $    202.4   $    573.9   $    342.5
                             ==========   ==========   ==========   ==========
        Operating revenues   $    191.4   $    294.6   $    360.2   $    535.4
                             ==========   ==========   ==========   ==========
        Gross earnings
          from operations    $     25.2   $     31.9   $     51.2   $     61.2
                             ==========   ==========   ==========   ==========

         The Energy Equipment Group had a backlog of $1,509.3 at June 25, 1999,
         which represented a 4% increase from June 26, 1998 due primarily to
         orders awarded in the second quarter of 1999. Approximately 32% of the
         Energy Equipment Group's backlog as of June 25, 1999 represents orders
         from Asia. These orders are for large utility size boilers, payments
         under which are supported by financing agreements guaranteed by United
         States, European or Japanese export credit agencies. New orders booked
         for the six month period ended June 25, 1999 increased by 68% from
         corresponding periods in 1998. This is due to an order taken in the
         second quarter of 1999 for boilers in Eastern Europe. Operating
         revenues for the six month period ended June 25, 1999 decreased by 33%
         primarily due to the low level of new orders booked during 1998. Gross
         earnings from operations decreased by $10.0 for the six month period
         ended June 25, 1999 compared with the period ended June 26, 1998,
         related primarily to the lower level of operating revenues.

         POWER SYSTEMS GROUP

                                 THREE MONTHS ENDED       SIX MONTHS ENDED
                                 ------------------       ----------------
                                JUNE 25,    JUNE 26,     JUNE 25,     JUNE 26,
                                 1999        1998          1999        1998
                             ----------   ----------   ----------   ----------

        Backlog              $    173.5   $    271.8   $    173.5   $    271.8
                             ==========   ==========   ==========   ==========
        New orders           $     34.9   $     33.6   $     82.4   $     94.0
                             ==========   ==========   ==========   ==========
        Operating revenues   $     31.4   $     36.8   $     83.2   $     77.2
                             ==========   ==========   ==========   ==========
        Gross (loss)/
          earnings from
          operations         $    (10.9)   $     1.0   $     (0.3)   $     4.0
                             ==========   ==========   ==========   ==========


                                       18


<PAGE>

         The Power Systems Group's gross earnings from operations for the six
         month period ended June 25, 1999 decreased due to 1999 losses related
         to the Robbins Facility of $16.2 of which $15.6 was incurred in the
         second quarter. The second quarter included approximately $12.2
         associated with the maintenance and technical enhancements performed, a
         portion of which was made in anticipating a transfer of Foster
         Wheeler's interest to other parties. The future earnings of the Power
         Systems Group will be negatively impacted by the Robbins Facility due
         to (1) funding of the Corporation's guarantees of $79.6 and (2) the
         unamortized prepaid lease expense of $42.2. A preliminary agreement has
         been announced regarding the Robbins Facility that could significantly
         change the timing and amount of the Robbins losses (see "Subsequent
         Events" below for details).


         FINANCIAL CONDITION

         The Corporation's consolidated financial condition declined during the
         six months ended June 25, 1999 as compared to December 25, 1998.
         Stockholders' equity for the six months ended June 25, 1999 decreased
         by $23.7, due primarily to changes in the foreign currency translation
         adjustment of $27.6 and dividends paid of $17.1, offset by earnings of
         $20.8.

         During the six months ended June 25, 1999, long-term investments in
         land, buildings and equipment were $59.7 as compared with $58.4 for the
         comparable period in 1998. Approximately $34.1 was invested in a
         waste-to-energy project in Italy during the first six months of 1999.

         Since December 25, 1998, long-term debt, including current installments
         and bank loans, decreased by $75.7, primarily due to payment of debt
         from the proceeds of Trust Preferred. On January 13, 1999, FW Preferred
         Capital Trust I, a Delaware business trust, issued $175,000 in
         Preferred Trust Securities. These Preferred Trust Securities are
         entitled to receive cumulative cash distributions at an annual rate of
         9%.

         In the ordinary course of business, the Corporation and its
         subsidiaries enter into contracts providing for assessment of damages
         for nonperformance or delays in completion. Suits and claims have been
         or may be brought against the Corporation by customers alleging
         deficiencies in either equipment design or plant construction. Based on
         its knowledge of the facts and circumstances relating to the
         Corporation's liabilities, if any, and to its insurance coverage,
         management of the Corporation believes that the disposition of such
         suits will not result in charges against assets or earnings materially
         in excess of amounts provided in the accounts.

         LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents totaled $171.5 at June 25, 1999, a decrease
         of $8.5 from fiscal year end 1998. Short-term investments decreased by
         $27.1 to $34.1. During the six months of fiscal 1999, the Corporation
         paid $17.1 in dividends to stockholders. Cash used by operating
         activities amounted to $50.6.

         Over the last several years, working capital needs have increased as a
         result of the Corporation satisfying its customers' requests for more
         favorable payment terms under contracts. Such requests generally


                                       19


<PAGE>

         include reduced advance payments and more favorable payment schedules.
         Such terms, which require the Corporation to defer receipt of payments
         from its customers, have had a negative impact on the Corporation's
         available working capital. The Corporation intends to satisfy its
         continuing working capital needs by borrowing under its Revolving
         Credit Agreements, through internal cash generation and third party
         financings in the capital markets. The Corporation's pricing of
         contracts recognizes costs associated with the use of working capital.

         The Corporation estimates payments under the corporate guarantees for
         the Robbins Facility to be $5.4 in 1999; $13.1 in 2000; $14.3 in 2001;
         and $46.8 in 2002 and thereafter. These foregoing estimates are subject
         to change based on factors included in the preliminary agreement with
         the holder of a majority of bonds issued to finance the Robbins
         Facility (see "Subsequent Events" below for details).

         Management of the Corporation believes that cash and cash equivalents
         of $171.5 and short-term investments of $34.1 at June 25, 1999,
         combined with cash flows from operating activities, amounts available
         under its Revolving Credit Agreements and access to third-party
         financings in the capital markets will be adequate to meet its working
         capital and liquidity needs for the foreseeable future. During the
         second quarter of 1998, the Corporation filed a Registration Statement
         on Form S-3 relating to up to $300.0 of debt, equity, and other
         securities, $175.0 of which have been issued as of June 25, 1999.

         The Corporation is reviewing various methods to monetize selected Power
         Systems assets and will be concentrating on reducing both corporate and
         project debt, and improving cash flow.

         OTHER MATTERS

         The Corporation and its subsidiaries, along with many other companies,
         are codefendants in numerous lawsuits pending in the United States.
         Plaintiffs claim damages for personal injury alleged to have arisen
         from exposure to or use of asbestos in connection with work performed
         by the Corporation and its subsidiaries during the 1970s and prior. As
         of June 25, 1999, there were approximately 72,100 claims pending.
         During 1999, approximately 16,400 new claims have been filed and
         approximately 6,600 have been either settled or dismissed without
         payment. The Corporation has agreements with insurance carriers
         covering significantly more than a majority of the potential costs
         relating to these exposures. The Corporation has recorded, with respect
         to asbestos litigation, an asset relating to the probable insurance
         recoveries and a liability relating to probable losses. These assets
         and liabilities were estimated based on historical data developed in
         conjunction with outside experts. Management of the Corporation has
         carefully considered the financial viability and legal obligations of
         its insurance carriers and has concluded that except for those insurers
         that have become or may become insolvent, the insurers will continue to
         adequately fund claims and defense costs relating to asbestos
         litigation.

         In 1997, the United States Supreme Court effectively invalidated New
         Jersey's long-standing municipal solid waste flow rules and
         regulations. The immediate effect was to eliminate the guaranteed
         supply of municipal solid waste to the Camden Project with its
         corresponding tipping fee revenue. As a result, tipping fees have been
         reduced to market rate in order to provide a steady supply of fuel to


                                       20


<PAGE>

         the plant. Those market-based revenues are not expected to be
         sufficient to service the debt on outstanding bonds, which were issued
         to construct the plant and to acquire a landfill for Camden County's
         use. The debt although reflected in the consolidated financial
         statements of the Corporation has been issued by the Pollution Control
         Financing Authority of Camden County. This debt is collateralized by
         pledging certain revenue and assets of the project but not the plant.
         The Corporation's obligation is to fund the debt to the extent the
         project generates a positive cash flow. The Corporation has filed suit
         against certain involved parties seeking among other things, to void
         the applicable contracts and agreements governing the Camden Project.
         Pending final outcome of the litigation and the results of legislative
         initiatives in New Jersey to resolve the issues relating to the debt
         obligations associated with the Camden Project, management believes
         that the plant will continue to operate at full capacity while earning
         sufficient revenues to cover its fees as operator of the plant.
         However, at this time, management cannot determine the effect of the
         foregoing on the Camden Project. The equity partner's interest in the
         Camden Project will be purchased by the Corporation in December 1999
         for approximately $26.0.

         The ultimate legal and financial liability of the Corporation in
         respect to all claims, lawsuits and proceedings cannot be estimated
         with certainty. As additional information concerning the estimates used
         by the Corporation becomes known, the Corporation reassesses its
         position both with respect to gain contingencies and accrued
         liabilities and other potential exposures. Estimates that are
         particularly sensitive to future change relate to legal matters, which
         are subject to change as events evolve and as additional information
         becomes available during the administration and litigation process.

         SUBSEQUENT EVENTS

         On July 27, 1999, the Corporation announced it had reached a
         preliminary agreement with holders of a majority of the principal
         amount of bonds issued in connection with the financing of the Robbins
         facility. Under the agreement, the project will be restructured by,
         among other things, exchanging existing bonds for new bonds, selling
         the facility to a third-party owner/operator and allowing Foster
         Wheeler to exit from its operating role.

         Specific elements are that Foster Wheeler will:
         -- Provide subordinated guarantees on $113.0 aggregate principal amount
            of tax-exempt bonds to be issued by the Village of Robbins,
            Illinois, in exchange for a portion of the existing bonds, including
            $95.0 of amortizing 25-year bonds and $18.0 of 10-year accretion
            bonds with interest paid at maturity;
         -- Pending sale of the facility, operate the facility for up to two
            years with no operational guarantees and full cost reimbursement;
         -- Pay in October 1999 approximately $5.4 of its existing $55.0 support
            obligation (the remaining obligations under the $55.0 support will
            be terminated upon consummation of the exit transaction and the
            issuance of the $113.0 of Foster Wheeler supported bonds);
         -- Continue to prosecute the retail rate litigation against various
            Illinois State officials, and,
         -- Cooperate with the bondholders in seeking a new third-party
            owner/operator for the facility.

         The transaction is subject to due diligence, requires third-party and
         bondholder approvals and execution of a definitive agreement. After the
         transaction is consummated, the Corporation does not expect to incur
         any further operating losses from the Robbins project.

                                       21

<PAGE>


         During the third quarter, assuming that a definitive agreement is
         executed, the Corporation will take a pretax charge of approximately
         $210.0. The charge will fully write off all existing obligations of
         Foster Wheeler related to the Robbins Resource Recovery Facility,
         including the prepaid lease expense, $20.0 of outstanding bonds issued
         in conjunction with the equity financing of the facility, transaction
         expenses and ongoing legal expenses associated with the Retail Rate Law
         litigation.

         If the charge relating to the Robbins Facility, discussed above, is
         taken in 1999, the Corporation will be required to obtain a waiver from
         the lenders under the Revolving Credit Agreements.


         COST REDUCTIONS

         The Corporation's continuing business strategy is to maintain focus on
         its core business segments in engineering and construction and energy
         equipment. In order to remain competitive in these segments while
         improving margins, the Corporation is reducing costs through staff
         reduction and closure of some smaller operating facilities. These
         changes include the reduction of approximately 1,600 permanent
         positions, including 300 overhead and other support positions from its
         worldwide workforce of 11,000. In addition, approximately 800 agency
         personnel within the Engineering & Construction Group will be reduced
         during the course of this year. The positions eliminated will include
         engineering, clerical, support staff and manufacturing personnel.

         The annual savings from the reduction in overhead and other support
         positions and facility closures are expected to be approximately
         $16-18. The Corporation expects to take a pretax charge of
         approximately $35.0 in the third quarter as a result of implementation
         of this plan. At the end of July, the Corporation has completed
         approximately 35% of these reductions.

         DIVIDEND REDUCTION

         The Corporation's Board of Directors at a meeting held July 27, 1999
         reduced the quarterly dividend to $0.06 per share from $0.21 per share,
         payable on September 15, 1999 to stockholders of record as of August
         16, 1999.

         The Board of Directors' decision to reduce the dividend was based on a
         variety of market factors, and the previously stated goal of improving
         cash flow. The improved cash flow will further the Corporation's goal
         of reducing its debt levels and promote financial flexibility in the
         future conduct of the business.


                                       22




<PAGE>


         YEAR 2000

         GENERAL

         For purposes of this statement the "Year 2000 Problem" is defined to
         mean the inability of a computer or other device to perform properly
         because it does not interpret date information correctly. It is
         believed that cases of misinterpretation might result from computer
         hardware, firmware or software using only two digits to identify year
         information, and therefore not being able to distinguish the year 1900
         from the year 2000. However, other date-related misinterpretations may
         also occur, including one, which could occur when the date February 29,
         2000 is processed. Also for purposes of this statement "Year 2000
         Compliant" means that the performance or functionality of a device
         (including software) is not affected by dates prior to, during or after
         the Year 2000.

         STATE OF READINESS/BUSINESS CONTINUATION PLAN

         The Corporation and its subsidiaries initiated Year 2000 activities in
         1996. In 1997 a formal Year 2000 Problem management strategy was
         prepared. At that time the Corporation formed a company-wide committee
         (the "Y2K Committee") to develop a Business Continuation Plan focused
         on the Year 2000 Problem. Each of the Corporation's subsidiaries formed
         similar committees and coordinated their efforts through Chairmen
         selected for each Committee. Each subsidiary committee also prepared a
         Business Continuation Plan. Each Committee Chairman reports on a
         quarterly basis to the Corporation's Y2K Committee Chairman, who then
         reports to the Corporation's Executive Committee.

         In 1997, the Y2K Committee prepared a plan to safeguard against
         interruption of the Corporation's (and its subsidiaries') business
         activities as a result of Year 2000 Problems. The plan included an
         Assessment Step, a Testing Step, a Remediation Step and a Confirmation
         Step. Since 1996 the Corporation and/or its subsidiaries have been
         investigating the IT and non-IT equipment, software and services they
         use to identify, evaluate, modify and/or replace goods or services
         which are not Year 2000 Compliant.

         The Corporation and its subsidiaries have all completed the Assessment
         Step and are substantially advanced in the Testing and Remediation
         Steps. Some subsidiaries, such as Foster Wheeler Power Systems, Inc.,
         and its subsidiaries, must wait for scheduled outage periods in order
         to complete Testing and/or Remediation activities, but all are expected
         to do so by the third quarter of 1999. All subsidiaries have reported
         that they have completed at least seventy-five percent (75%) of their
         Testing Step activities. The primary computerized reporting and control
         system used by the Corporation and most of its subsidiaries, which was
         provided by J.D. Edwards, has been confirmed by the vendor to be Year
         2000 Compliant.

         LIABILITY EXPOSURE MANAGEMENT

         In 1997 the Corporation formed a group to develop a strategy for
         managing liability exposures which could result from the Year 2000
         Problem (the "Y2K Liaison Group"). Since then the Y2K Liaison Group has
         developed guidelines for the Corporation's subsidiaries that address
         future, current and completed contract activities, and has also
         conducted global conferences for the Corporation's subsidiaries to
         discuss how those guidelines should be implemented. The Corporation's
         Executive Committee adopted the Y2K Liaison Group's guidelines as
         business policies in 1998.


                                       23


<PAGE>


         The Corporation has owned the stock of various companies which are no
         longer operating or whose stock or assets were sold to others. When the
         Corporation sold the stock or assets of such companies, it transferred
         the company's records to the purchaser. The Corporation has evaluated
         its legal obligations in regard to equipment and software that was
         created and sold by those companies during the time that the
         Corporation owned them and has taken steps to manage liability
         exposures which those companies' activities may present. In some cases,
         the Corporation was not able to find records that would allow it to
         identify the nature of the equipment and software or the identities of
         the owners of the equipment and software.

         THIRD PARTY REVIEW

         In 1998 the Corporation engaged a third party to conduct a review of
         certain aspects of the Corporation's and its subsidiaries' Business
         Continuation Plans. This review was completed during November 1998, and
         the resulting report is being acted on by management. The Corporation
         also engaged several law firms to prepare reports regarding liabilities
         which the Corporation and its subsidiaries may face, and
         recommendations for liability exposure management. This work was
         completed in August 1998. The Corporation formed a team of in-house
         lawyers and others to conduct a Y2K legal liability audit of the
         Corporation. The Corporation engaged an outside law firm to review and
         report on the adequacy of the audit to identify potential Y2K
         liability. The audit is expected to be completed during the third
         quarter of 1999 and a report of the outside law firm is expected to be
         received during the third quarter of 1999.

         COORDINATION WITH OUTSIDE PARTIES

         The Corporation and its subsidiaries coordinate with insurers, clients,
         vendors, contractors and trade organizations to keep abreast of Year
         2000 matters. The Corporation also has participated and plans to
         participate in conferences, seminars and other gatherings to improve
         its Year 2000 readiness condition as the Year 2000 approaches.

         COSTS

         The total cost associated with required modifications to become Year
         2000 Compliant is not expected to be material to the Corporation's
         financial position. The estimated total cost of the Year 2000 Project
         is approximately $10.0. Items of a capital nature will be capitalized
         while all other costs will be expensed as incurred. This estimate does
         not include a share of Year 2000 costs that may be incurred by
         partnerships and joint ventures in which the Corporation or its
         subsidiaries participate. The total amount expended on the Business
         Continuation Plan through June 25, 1999 was $5.5, of which
         approximately $5.0 related to the cost to repair or replace software
         and related hardware problems, and approximately $0.5 related to the
         cost of identifying and communicating with vendors and/or contractors.
         The estimated future cost of completing implementation of the Business
         Continuation Plan is estimated to be approximately $4.5. All Year 2000
         expenses will be funded from operations.


                                       24


<PAGE>


         CONTINGENCY PLANS

         Although the Corporation and its subsidiaries expect to be ready to
         continue their business activities without interruption by a Year 2000
         Problem, they recognize that they depend on outsiders (such as
         suppliers, contractors and utility companies) to provide various goods
         and services necessary for doing business. The Corporation is now
         developing a contingency plan for itself, and has required each of its
         subsidiaries to do likewise. Each plan will address alternative
         arrangements to cope with Year 2000 Problems caused by others, and
         back-up strategies to follow if a subsidiary's software or equipment
         does not perform properly, even though it appears now to be Year 2000
         Compliant. Draft contingency plans have been prepared by several of the
         Corporation's subsidiaries. All subsidiaries contingency plans should
         be finalized by the end of the third quarter 1999.

         RISKS

         The failure to correct a Year 2000 Problem could result in an
         interruption in, or a failure of, certain normal business activities or
         operations. Such failures are not expected to materially adversely
         affect the Corporation's results of operations and financial condition.
         However, due to the general uncertainty inherent in the Year 2000
         Problem, resulting in part from the uncertainty about the Year 2000
         readiness of vendors, contractors and customers, the Corporation is
         unable to determine at this time whether the consequences of Year 2000
         Problems will have a material impact on the Corporation's results of
         operations or financial condition. The completion of the Business
         Continuation Plan is expected to significantly reduce the Corporation's
         level of uncertainty about the Year 2000 Problem and, in particular,
         about Year 2000 Compliance and readiness of vendors, contractors and
         customers. The Corporation believes that the implementation of new
         business systems and the complete implementation of the Business
         Continuation Plan should reduce the possibility of significant
         interruptions of normal operation.

         It is not possible to describe a "most reasonably likely worst case
         Year 2000 scenario" without making a variety of assumptions. The
         Corporation's Business Continuation Plan assumes that parties which
         provide us goods or services necessary for its operations will continue
         to do so, or that the contingency features of the Corporation's Plan
         will respond to address its needs. Based upon those assumptions the
         Corporation believes that a most likely worst case Year 2000 scenario
         may make it necessary to replace some suppliers or contractors,
         rearrange some work plans or even interrupt some field activities. The
         Corporation does not believe that such circumstances will materially
         adversely affect the financial condition or results of operations, even
         if it is necessary to incur costs to do so.

         Readers are cautioned that forward-looking statements contained in the
         Year 2000 Statement should be read in conjunction with the
         Corporation's risk disclosures under the heading: "Safe Harbor
         Statement."


                                       25


<PAGE>


         SAFE HARBOR STATEMENT

         This Management's Discussion and Analysis of Financial Condition and
         Results of Operations and other sections of this Report on Form 10-Q
         contain forward-looking statements that are based on management's
         assumptions, expectations and projections about the various industries
         within which the Corporation operates. Such forward-looking statements
         by their nature involve a degree of risk and uncertainty. The
         Corporation cautions that a variety of factors, including but not
         limited to the following, could cause business conditions and results
         to differ materially from what is contained in forward-looking
         statements: changes in the rate of economic growth in the United States
         and other major international economies, changes in investment by the
         energy, power and environmental industries, changes in regulatory
         environment, changes in project schedules, changes in trade, monetary
         and fiscal policies worldwide, currency fluctuations, outcomes of
         pending and future litigation, protection and validity of patents and
         other intellectual property rights and increasing competition by
         foreign and domestic companies. In addition, there can be no assurance
         that a definitive agreement with bondholders with respect to the
         Robbins Facility will be reached, or if reached that the terms will not
         be materially different from the terms set forth in the preliminary
         agreement.

         The Corporation's management continues to evaluate the Corporation's
         condition of readiness relating to the Year 2000 Problem and the costs
         and risks arising from the Year 2000 Problem, and is designing and
         developing the Corporation's contingency plan, based on its best
         estimates of certain factors, which estimates were derived by relying
         on numerous assumptions about future events. However, there can be no
         guarantee that these assumptions or estimates have been correctly made,
         or that there will not be a delay in, or increased costs associated
         with, the implementation of the Corporation's Business Continuation
         Plan. A delay in the implementation of the Business Continuation Plans
         of the Corporation or of the Corporation's subsidiaries could also
         affect the Corporation's readiness for the Year 2000. Specific factors
         that might cause actual outcome to differ from the projected outcome
         include, without limitation, the continued availability and cost of
         consulting services and of personnel trained in the computer
         programming necessary for remediation of the Year 2000 issue, the
         ability to locate and correct all relevant computer code, timely
         responses by third parties and suppliers, and the ability to implement
         interfaces between the new systems and the systems not being replaced.


                                       26


<PAGE>


         PART II   OTHER INFORMATION
         ITEM 1 - LEGAL PROCEEDINGS

         Under the federal Comprehensive Environmental Response, Compensation
         and Liability Act ("CERCLA") and similar state laws, the current owner
         or operator of real property and the past owners or operators of real
         property (if disposal took place during such past ownership or
         operation) may be jointly and severally liable for the costs of removal
         or remediation of toxic or hazardous substances on or under their
         property, regardless of whether such materials were released in
         violation of law or whether the owner or operator knew of, or was
         responsible for, the presence of such substances. Moreover, under
         CERCLA and similar state laws, persons who arrange for the disposal or
         treatment of hazardous or toxic substances may also be jointly and
         severally liable for the costs of the removal or remediation of such
         substances at a disposal or treatment site, whether or not such site
         was owned or operated by such person ("off-site facility"). Liability
         at such off-site facilities is typically allocated among all of the
         viable responsible parties based on such factors as the relative amount
         of waste contributed to a site, toxicity of such waste, relationship of
         the waste contributed by a party to the remedy chosen for the site, and
         other factors.

         The Corporation currently owns and operates industrial facilities and
         has also transferred its interests in industrial facilities that it
         formerly owned or operated. It is likely that as a result of its
         current or former operations, such facilities have been impacted by
         hazardous substances. The Corporation is not aware of any conditions at
         its currently owned facilities in the United States that it expects
         will cause the Corporation to incur significant costs. The Corporation
         is aware of potential environmental liabilities at facilities that it
         recently acquired in Europe, but the Corporation has the benefit of an
         indemnity from the Seller with respect to any required remediation or
         other environmental violations that it believes will address the costs
         of any such remediation or other required environmental measures. The
         Corporation also may receive claims, pursuant to indemnity obligations
         from owners of recently sold facilities that may require the
         Corporation to incur costs for investigation and/or remediation. Based
         on the available information, the Corporation does not believe that
         such costs will be material. No assurance can be provided that the
         Corporation will not discover environmental conditions at its currently
         owned or operated properties, or that additional claims will be made
         with respect to formerly owned properties, that would require the
         Corporation to incur material expenditures to investigate and/or
         remediate such conditions.

         The Corporation had been notified that it was a potentially responsible
         party ("PRP") under CERCLA or similar state laws at three off-site
         facilities, excluding sites as to which the Corporation has resolved
         its liability. At each of these sites, the Corporation's liability
         should be substantially less than the total site remediation costs
         because the percentage of waste attributable to the Corporation
         compared to that attributable to all other PRPs is low. The Corporation
         does not believe that its share of cleanup obligations at any of the
         three off-site facilities as to which it has received a notice of
         potential liability will individually exceed $1.0 million.

         The Corporation received an Administrative Order and Notice of Civil
         Administrative Penalty Assessment (the "Administrative Order") dated
         April 1, 1997 alleging state air act violations at the Camden Project
         in New Jersey. The Administrative Order seeks a penalty of $32,000 and



                                       27


<PAGE>

         revocation of the Certificate to Operate. The Corporation requested an
         administrative hearing to challenge the Administrative Order, which
         request automatically stayed any permit revocation. The Corporation
         expects an additional penalty demand to increase to more than $100,000
         as a result of other violations which the Corporation expects the state
         to allege. The Corporation believes that it will be able to address all
         issues of concern to the state and that the resulting civil penalty
         will not be material to the Corporation.

         The Corporation received a Complaint for Injunction and Civil Penalties
         from the State of Illinois dated April 28, 1998 alleging primarily
         state air act violations at the Robbins Facility (PEOPLE OF THE STATE
         OF ILLINOIS V. FOSTER WHEELER ROBBINS, INC., filed in the Circuit Court
         of Cook County, Illinois, County Department, Chancery Division).
         Although the complaint seeks substantial civil penalties for numerous
         violations of up to $50,000 for each violation, with an additional
         penalty of $10,000 for each day of each violation, the maximum allowed
         under the statute, and an injunction against continuing violations, the
         Corporation has submitted a plan to the state designed to correct all
         violations and expects that the resulting penalty will not be material
         to the Corporation.


         ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

                  (a)   EXHIBITS
                   --------

                   EXHIBIT
                   NUMBER          EXHIBIT
                   ------          -------

                   12-1            Statement of Computation of Consolidated
                                   Ratio of Earnings to Fixed Charges and
                                   Combined Fixed Charges

                   27              Financial Data Schedule (For the
                                   informational purposes of the Securities and
                                   Exchange Commission only.)

             (b)   REPORTS ON FORM 8-K
                   -------------------
                   None


                                       28



<PAGE>





                                      SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
         the Registrant has duly caused this Report to be signed on its behalf
         by the undersigned, thereunto duly authorized.

                                                     FOSTER WHEELER CORPORATION
                                                            (Registrant)



         Date:  AUGUST 5, 1999                        /S/ RICHARD J. SWIFT
               ------------------------              ---------------------
                                                     Richard J. Swift
                                                     (Chairman, President and
                                                      Chief Executive Officer)



         Date:  AUGUST 5, 1999                        /S/ DAVID J. ROBERTS
               ------------------------              ---------------------
                                                     David J. Roberts
                                                     (Vice Chairman and
                                                     Chief Financial Officer)



                                       29





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