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 MARCH 30, 2001

                                       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, NJ                       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: 40,779,560 shares of the
Corporation's common stock ($1.00 par value) were outstanding as of March 30,
2001.


<PAGE>






                           FOSTER WHEELER CORPORATION

                                      INDEX



Part I            Financial Information:

         Item 1 - Financial Statements:

                  Condensed Consolidated Balance Sheet at March 30, 2001 and
                  December 29, 2000

                  Condensed Consolidated Statement of Earnings and
                  Comprehensive Income for the Three Months Ended
                  March 30, 2001 and March 31, 2000

                  Condensed Consolidated Statement of Cash Flows for the
                  Three Months Ended March 30, 2001 and March 31, 2000

                  Notes to Condensed Consolidated Financial Statements


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

         Item 3 - Quantitative and Qualitative Disclosures about Market Risk

Part II            Other Information

         Item 1 - Legal Proceedings

         Item 4 - Submission of Matters to a Vote of Security Holders

         Item 6 - Exhibits and Reports on Form 8-K

Signatures

<PAGE>




                          PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            (In Thousands of Dollars)

                                                                 March 30, 2001   December 29,
                                                                   (UNAUDITED)        2000
                                                                   ----------         ----
                                  ASSETS
CURRENT ASSETS:
<S>                                                               <C>            <C>
     Cash and cash equivalents ................................   $   158,930    $   191,893
     Short-term investments ...................................         2,613          1,816
     Accounts and notes .......................................       824,203        889,166
        receivable
     Contracts in process and inventories .....................       498,572        464,329
     Prepaid, deferred and refundable income taxes ............        46,526         50,316
     Prepaid expenses .........................................        26,507         25,456
                                                                  -----------    -----------
         Total current assets .................................     1,557,351      1,622,976
                                                                  -----------    -----------
Land, buildings and equipment .................................       855,395        865,349
Less accumulated depreciation .................................       372,173        370,315
                                                                  -----------    -----------
         Net book value .......................................       483,222        495,034
                                                                  -----------    -----------
Notes and accounts receivable - long-term .....................        76,709         76,238
Investment and advances .......................................       116,418        120,551
Intangible assets, net ........................................       282,815        288,135
Prepaid pension cost and benefits .............................       184,031        189,261
Other, including insurance recoveries .........................       589,352        588,474
Deferred income taxes .........................................        97,366         96,859
                                                                  -----------    -----------
         TOTAL ASSETS .........................................   $ 3,387,264    $ 3,477,528
                                                                  ===========    ===========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Current installments on long-term debt ...................   $    20,044    $    19,876
     Bank loans ...............................................       100,347        103,479
     Accounts payable and accrued expenses ....................       638,281        708,515
     Estimated costs to complete long-term contracts ..........       474,703        521,277
     Advance payments by customers ............................        62,902         62,602
     Income taxes .............................................        33,350         38,854
                                                                  -----------    -----------
         Total current liabilities ............................     1,329,627      1,454,603
Corporate and other debt less current installments ............       363,180        306,001
Special-purpose project debt less current installments ........       250,844        255,304
Deferred income taxes .........................................        14,889         15,334
Postretirement and other employee benefits other than pensions        156,276        159,667
Other long-term liabilities and minority interest .............       634,598        637,190
Subordinated Robbins Facility exit funding obligations ........       110,340        110,340
Mandatorily redeemable preferred securities of subsidiary trust
     holding solely junior subordinated deferrable interest
     debentures ...............................................       175,000        175,000
                                                                  -----------    -----------
         TOTAL LIABILITIES ....................................     3,034,754      3,113,439
                                                                  -----------    -----------
STOCKHOLDERS' EQUITY:
Common Stock...................................................        40,804         40,748
Paid-in capital ...............................................       201,444        200,963
Retained earnings .............................................       246,912        241,250
Accumulated other comprehensive loss ..........................      (136,468)      (118,707)
                                                                  -----------    -----------
                                                                      352,692        364,254
Less cost of treasury stock ...................................           182            165
                                                                  -----------    -----------
TOTAL STOCKHOLDERS' EQUITY ....................................       352,510        364,089
                                                                  -----------    -----------
         TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY ..........................................   $ 3,387,264    $ 3,477,528
                                                                  ===========    ===========

See notes to condensed consolidated financial statements.
</TABLE>


                                       1


<PAGE>
<TABLE>
<CAPTION>


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

                                                       THREE MONTHS ENDED
                                                       ------------------
                                                  MARCH 30, 2001  MARCH 31, 2000
                                                  --------------  --------------
Revenues:
<S>                                                <C>             <C>
    Operating revenues .........................   $    682,643    $    822,036
    Other income ...............................         15,592          14,260
                                                   ------------    ------------

    Total revenues .............................        698,235         836,296
                                                   ------------    ------------

Costs and expenses:
    Cost of operating revenues .................        607,685         741,558
    Selling, general and adminis-
       trative expenses ........................         51,397          54,101
    Other deductions/minority
       interest ................................         24,709          23,011
    Dividends on preferred security
       of subsidiary trust .....................          3,937           3,937
                                                   ------------    ------------

    Total costs and expenses ...................        687,728         822,607
                                                   ------------    ------------

Earnings before income taxes ...................         10,507          13,689
Provisions for income taxes ....................          2,402           5,317
                                                   ------------    ------------

Net earnings ...................................          8,105           8,372

Other comprehensive loss:
    Foreign currency translation
       adjustment ..............................        (17,716)        (12,115)
    Change in unrealized losses on derivative
       instruments, net of tax .................         (6,345)
    Cumulative effect on prior years
         (to December 29, 2000) of
         change in accounting principle
         for derivatives, net of tax ...........          6,300
                                                   ------------    ------------


Comprehensive loss .............................   $     (9,656)   $     (3,743)
                                                   ============    ============

Earnings per share:
    Basic ......................................   $        .20    $        .21
                                                   ============    ============
    Diluted ....................................   $        .20    $        .21
                                                   ============    ============

Shares outstanding:
    Basic ......................................     40,834,909      40,776,234
    Diluted ....................................        310,261             338
                                                   ------------    ------------

    Total diluted ..............................     41,145,170      40,776,572
                                                   ============    ============
Cash dividends paid per
    Common share ...............................   $        .06    $        .06
                                                   ============    ============


See notes to condensed consolidated financial statements.
</TABLE>


                                       2


<PAGE>

<TABLE>
<CAPTION>


                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (Unaudited)
                                                                THREE MONTHS ENDED
                                                                ------------------
                                                        MARCH 30, 2001   MARCH 31, 2000
                                                        --------------   --------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                            <C>          <C>
Net earnings ...............................................   $   8,105    $   8,372
Adjustments to reconcile net earnings to cash flows from
    operating activities:
Depreciation and amortization ..............................      13,873       15,086
Deferred tax ...............................................        (612)       1,011
Equity earnings, net of dividends ..........................      (2,782)      (4,546)
Other ......................................................        (127)      (3,869)
Changes in assets and liabilities:
Receivables ................................................      38,231       55,562
Contracts in process and inventories .......................     (23,300)     (26,155)
Accounts payable and accrued expenses ......................     (48,742)     (59,528)
Estimated costs to complete long-term contracts ............     (51,757)      14,637
Advance payments by customers ..............................       3,247       19,999
Income taxes ...............................................      (1,804)       3,798
Other assets and liabilities ...............................      (2,401)      (5,726)
                                                               ---------    ---------
NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES ...........     (68,069)      18,641
                                                               ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .......................................      (9,009)     (11,208)
Proceeds from sale of properties ...........................         259          798
Decrease in investments and advances .......................       7,587        5,316
(Increase)/decrease in short-term investments ..............        (804)       1,982
Partnership distributions ..................................      (1,367)      (2,599)
                                                               ---------    ---------
NET CASH USED BY INVESTING ACTIVITIES ......................      (3,334)      (5,711)
                                                               ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend to stockholders ...................................      (2,443)      (2,443)
Repurchase of common stock .................................         (37)         (83)
Proceeds from exercise of stock options ....................         531         --
Increase in short-term debt ................................       5,160       22,569
Proceeds from long-term debt ...............................      50,012        3,321
Repayment of long-term debt ................................      (4,300)     (14,067)
                                                               ---------    ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ..................      48,923        9,297
                                                               ---------    ---------

Effect of exchange rate changes on cash and cash equivalents     (10,483)      (4,780)
                                                               ---------    ---------

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS ...........     (32,963)      17,447
Cash and cash equivalents at beginning of year .............     191,893      170,268
                                                               ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD .................   $ 158,930    $ 187,715
                                                               =========    =========

Cash paid during period:
Interest (net of amount capitalized) .......................   $  10,945    $   9,855
Income taxes ...............................................   $   2,556    $   4,329
</TABLE>

See notes to condensed consolidated financial statements.


                                       3



<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 March 30, 2001, and the
     related condensed consolidated statements of earnings and comprehensive
     income and cash flows for the three month period ended March 30, 2001 and
     March 31, 2000 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 the
     requirements of 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 29, 2000 filed with the Securities and Exchange
     Commission on March 6, 2001, as amended by the Form 10K/A, (2000 Form 10-K)
     filed with the Securities and Exchange Commission on May 11, 2001. The
     Condensed Consolidated Balance Sheet as of December 29, 2000 has been
     derived from the audited Consolidated Balance Sheet included in the 2000
     Form 10-K. A summary of Foster Wheeler Corporation's significant accounting
     policies is presented on pages 27, 28 and 29 in its 2000 Form 10-K. Users
     of financial information produced for interim periods are encouraged to
     refer to the footnotes contained in the 2000 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
     quarter of 2001, except for the adoption of Statement of Financial
     Accounting Standard No. 133, "Accounting for Derivative Instruments and
     Hedging Activities", as discussed in Note 8.

2.   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. As of March 30, 2001 and December 29, 2000, costs of
     approximately $175,000 were included in assets, primarily in receivables
     and contracts in process, representing amounts expected to be realized from
     claims to customers. These claims have been recognized in accordance with
     the AICPA's Statement of Position 81-1, "Accounting for Performance of
     Construction - Type and Certain Production - Type Contracts". This
     Statement requires that it be probable that the claim will result in
     additional contract revenue and the amount can be reliably estimated. Such
     claims are currently in various stages of negotiation, arbitration and
     other legal proceedings. Accordingly, it is possible that the amounts
     realized could differ materially from the balances included in the
     financial statements. Management believes that these matters will be
     resolved without a material effect on the Corporation's financial position
     or results of operations.

3.   The Corporation maintains two revolving credit agreements (the "Revolving
     Credit Agreements") consisting of a $270,000 multi-year facility dated
     December 1, 1999 that expires on February 12, 2003 and a 364 day facility
     in the amount of $76,250 dated May 31, 2000 that expires on May 30, 2001.
     In 2001, the Corporation and the banks that are party to the Revolving
     Credit Agreements consented to amend those agreements (the "Amendments") on
     two occasions. The first Amendments provided for the following: (i)
     provisions associated with the planned change of domicile to Bermuda, (ii)
     provisions associated with the potential monetization, as previously
     announced, of certain build, own and operated assets, and (iii) the
     modification of certain financial covenants. The second amendment was only
     for the long-term revolving credit agreement. This amendment allows Foster





                                       4
<PAGE>

     Wheeler LLC to make payments to Foster Wheeler Ltd. in amounts sufficient
     to pay amounts due on the notes. The Revolving Credit Agreements require,
     among other things, that the Corporation maintain a maximum consolidated
     leverage ratio and a minimum consolidated fixed charge coverage ratio. The
     Corporation was in compliance with the covenants under the Revolving Credit
     Agreements as amended as of March 30, 2001.

     Loans under the Revolving Credit Agreements bear interest at a floating
     rate and are used for general corporate purposes. At March 30, 2001,
     $135,000 was borrowed under the Long-Term Revolving Credit Agreement and
     $76,250 was borrowed under the Short-Term Revolving Credit Agreement. These
     amounts appear on the Consolidated Balance Sheet under the captions
     "Corporate and Other Debt" and "Bank Loans", respectively. The Corporation
     pays various fees to the lenders under these agreements.

     The Corporation is also permitted to allocate a portion of its available
     credit under the Long-Term Revolving Credit Agreement for the issuance of
     standby letters of credit. Such amounts are not recorded as funded
     indebtedness, and at March 30, 2001, $111,180 of such standby letters of
     credit were outstanding.

     On January 13, 1999 FW Preferred Capital Trust I, a Delaware Business Trust
     which is a 100% owned finance subsidiary of the Corporation, issued
     $175,000 in Preferred Trust Securities. The Preferred Trust Securities are
     fully and unconditionally guaranteed by the Corporation. These Preferred
     Trust Securities are entitled to receive cumulative cash distributions at
     an annual rate of 9.0%. Distributions are paid quarterly in arrears on
     April 15, July 15, October 15 and January 15 of each year. Such
     distributions may be deferred for periods up to five years. The maturity
     date is January 15, 2029. Foster Wheeler can redeem these Preferred Trust
     Securities on or after January 15, 2004.

4.   In connection with the Robbins agreements referred to in PART II, ITEM 1 -
     LEGAL PROCEEDINGS, Foster Wheeler agreed to fund, on a subordinated basis,
     the following:

          (a) 1999C Bonds 7 1/4% interest, installments due October 15, 2009

                ($16,560) and October 15, 2024 ($77,155)              $   93,715

          (b) 1999D Bonds accrued at 7% due October 15, 2009              18,000
                                                                      ----------

                           Total                                        $111,715
                                                                      ==========

     1999C BONDS. The 1999C Bonds are subject to mandatory sinking fund
     reduction prior to maturity at a Redemption Price equal to 100% of the
     principal amount thereof, plus accrued interest to the redemption date.

5.   At March 30, 2001, a total of 4,240,801 shares of common stock were
     reserved for issuance under various stock option plans; of this total,
     586,180 were not under option.

6.   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 based on the basic plus the dilution of stock options. In 1999,
     the Corporation adopted The Directors Deferred Compensation and Stock Award
     Plan (the "Plan"). Under the Plan, each non-management director is credited
     annually with share units of the Corporation's common stock. In addition,
     each non-management director may elect to defer receipt of compensation for
     services rendered as a director, which deferred amount is credited to his
     or her account in the form of share units. The Corporation makes a
     supplemental contribution equal to 15% of the deferred amount. For the
     three months ended March 30, 2001, 12,806 share units were credited in
     participants' accounts. As of March 30, 2001, 101,081 share units were
     credited in participants' accounts and are included in the calculation of
     basic earnings per share.


                                       5
<PAGE>



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

                                                THREE MONTHS ENDED
                                                ------------------
                                       MARCH 30, 2001           MARCH 31, 2000
                                       --------------           --------------

                 Interest Income           $ 3,438                 $  2,750
                                           =======                 ========
                 Interest Cost             $20,895                 $ 20,886
                                           =======                 ========

     Included in the interest cost is interest capitalized on self-constructed
     assets, which was $130 and $1,475 for the quarters ended March 30, 2001 and
     March 31, 2000, respectively. Interest cost for the three months ended
     March 30, 2001 and March 31, 2000, also included $3,937 for dividends on
     Preferred Trust Securities.

8.   Effective January 1, 2001, the Corporation adopted Statement of Financial
     Accounting Standard ("SFAS") No. 133, "Accounting for Derivative
     Instruments and Hedging Activities," as amended by SFAS No. 137,
     "Accounting for Derivative Instruments and Hedging Activities - Deferral of
     the Effective Date of FASB Statement No. 133, an amendment of FASB
     Statement No. 133", and Statement of SFAS No. 138, "Accounting for Certain
     Derivative Instruments and Certain Hedging Activities", an amendment of
     FASB Statement No. 133. These statements requires that all derivative
     instruments be reported on the balance sheet at fair value.

     The Corporation operates on a worldwide basis. The Corporation's activities
     expose it to risks related to the effect of changes in the foreign-currency
     exchange rates. The Corporation maintains a foreign-currency
     risk-management strategy that uses derivative instruments to protect its
     interests from unanticipated fluctuations in earnings and cash flows that
     may arise from volatility in currency exchange rates. These items have been
     designated as cash flow hedges. The Corporation does not engage in currency
     speculation. The Corporation's forward exchange contracts do not subject
     the Corporation to significant risk from exchange rate movement because
     gains and losses on such contracts offset losses and gains, respectively,
     in the transactions being hedged. The Corporation is exposed to credit loss
     in the event of non-performance by the counter-parties. All of these
     counter- parties are significant financial institutions that are primarily
     rated A or better by Standard & Poor's or A2 or better by Moody's. The
     amount of unrealized gains owed to the Corporation by counter-parties at
     March 30, 2001 is $17,762 and is included in Contracts in process and
     inventories. The amount of unrealized losses owed by the Corporation to the
     counter-parties at March 30, 2001 is $17,832 and is included in Estimated
     costs to complete long-term contracts. A $45 net of tax loss was recorded
     in Other Comprehensive Income as of March 30, 2001.

     The Corporation formally documents its hedge relationships at inception,
     including identification of the hedging instruments and the hedged items,
     as well as its risk management objectives and strategies for undertaking
     the hedge transaction. The Corporation also formally assesses both at
     inception and at least quarterly thereafter, whether the derivatives that
     are used in hedging transactions are highly effective in offsetting changes
     in the fair value of the hedged items. Changes in the fair value of these
     derivatives are recorded in other comprehensive income until earnings are
     affected by the recognition of the foreign exchange gains and losses
     associated with the hedged forecasted transaction. Such amounts, if they
     occur, will be included in operating revenues or cost of operating
     revenues. Any hedge amount by which the changes in fair value of the
     derivative exceed the recognition of the foreign exchange gains and losses
     associated with the hedged forecasted transactions, is recorded in current
     period earnings as other income or other deductions. There were no amounts
     excluded from the assessment of hedge effectiveness and there was no hedge
     ineffectiveness for the three months ended March 30, 2001. No amounts were
     reclassified to earnings during the first quarter in connection with
     forecasted transactions that are no longer considered probable of
     occurring.



                                       6
<PAGE>




     The Corporation recorded a $6,300 net of tax cumulative-effect adjustment
     in the comprehensive income relating to fair value of hedging instruments
     as of December 30, 2000 (The first day of the new fiscal year). As of March
     30, 2001, $2,995 of deferred net losses on derivative instruments
     accumulated in other comprehensive income are expected to be reclassified
     as earnings during the next twelve months based upon the realization of the
     forecasted cash flows of the transactions. As of December 29, 2000, $5,045
     of deferred net gains on derivative instruments accumulated in other
     comprehensive income was expected to be reclassified as earnings during the
     next twelve months based upon the recognition of the foreign exchange gains
     and losses associated with the hedged forecasted transactions. The maximum
     term over which the Corporation is hedging exposure to the variability of
     cash flows is thirty six months.


     A reconciliation of current period changes, net of applicable income taxes,
     in accumulated other comprehensive income relating to derivatives
     qualifying as cash flow hedges are as follows:

           Transition adjustment as of December 30, 2000          $6,300
           Current period declines in fair value                  (5,645)
           Reclassifications to earnings                            (700)
                                                                ---------

           Balance at March 30, 2001                            $    (45)
                                                                =========

9.   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. The agreement contains certain covenants and provides for
     various events of termination. At March 30, 2001 and December 29, 2000,
     $50,000 in receivables were sold under the agreement and are therefore not
     reflected in the accounts receivable - trade balance in the Condensed
     Consolidated Balance Sheet.


10.  On April 23, 2001, the Corporation's shareholders approved the
     reorganization that will result in the shareholders owning shares of a
     Bermuda company, Foster Wheeler Ltd.

11.  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 surrounding such claims and of its insurance coverage for
     such claims, if any, 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 for in the
     accounts.


     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 March 30, 2001, there
     were approximately 102,800 claims pending. During the first quarter of
     2001, approximately 13,300 new claims have been filed and approximately
     2,600 were either settled or dismissed without payment. The amount spent on
     asbestos litigation defense and case resolution, substantially all of which
     was reimbursed or will be reimbursed from insurance coverage was $8,900 in
     the first quarter of 2001.



                                       7
<PAGE>



     The Corporation continues to actively manage the claims and to negotiate
     with certain insurance carriers concerning the limits of coverage provided
     during different time periods. The Corporation has recorded an asset
     relating to probable insurance recoveries and a liability related to
     probable losses. During 2000 there were a number of companies that
     petitioned courts for protection under Federal Bankruptcy Laws as a result
     of the burden of litigation relating to asbestos, which has effectively
     reduced the number of potential defendants. In the first quarter of 2001,
     lawsuits commenced among the Corporation and its insurers to determine
     their respective rights and responsibilities. Management of the Corporation
     after consultation with counsel, has considered the litigation, the
     financial viability and legal obligations of its insurance carriers and
     believes that except for those insurers that have become or may become
     insolvent, for which a reserve has been provided, the insurers or their
     guarantors will continue to adequately fund claims and defense costs
     relating to asbestos litigation. It should be noted that the estimate of
     the assets and liabilities related to asbestos claims and recovery is
     subject to a number of uncertainties that may result in significant changes
     in the current estimates. Among these are uncertainty as to the ultimate
     number of claims filed, the amounts of claim costs, the impact of
     bankruptcies of other companies currently involved in litigation,
     uncertainties surrounding the litigation process from jurisdiction to
     jurisdiction and from case to case, as well as potential legislative
     changes.

On November 30, 1999, the United States District Court for the Northern District
of Texas handed down a final judgment in the case of KOCH ENGINEERING COMPANY,
INC. ET AL VS. GLITSCH, INC., ET AL. Glitsch, Inc. (now known as Tray, Inc.) is
an indirect subsidiary of the Corporation. This lawsuit, which claimed damages
for patent infringement and trade secret misappropriations, has been pending for
over 17 years. The judgment awarded compensatory damages of $20,900 plus
prejudgment interest in an amount yet to be calculated by the Court and punitive
damages equal to 50% of compensatory damages, or approximately $10,500. While
the Court has not finally determined the amount of pre-judgement interest, it
has preliminarily ruled that pre-judgement interest on actual patent
infringement damages will be based on an annualized 90-day Treasury bill rate
calculation. The Court also ruled that post-judgement interest will be paid at a
rate of 5.471% on all actual damages from November 30, 1999 until paid. If the
Court adopts the plaintiff's pre-judgement interest calculations, the award of
pre-judgement interest could amount to approximately $14,800 with respect to the
patent infringement damages and approximately $8,200 for the trade secret
misappropriation. Tray, Inc. has various motions for relief from the judgment
which are presently pending before the trial court. Tray, Inc. believes it has
reasonable grounds to appeal the judgement as it has been advised by counsel
that the Court's decision contains numerous legal and factual errors subject to
reversal on appeal. While Tray, Inc. believes it has reasonable grounds to
prevail on appeal, the ultimate outcome cannot be determined.

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. 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 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 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 a positive cash flow. The Corporation has filed suit against
the involved parties, including the State of New Jersey, seeking, among other
things, to void the applicable contracts and agreements governing this project.
Pending final outcome of the litigation and results of legislative initiatives
in New Jersey to resolve the issues relating to the debt obligations associated
with the project, management believes that the plant will continue to operate at
full capacity while receiving market rates for waste disposal. However, at the
same time, management cannot determine the ultimate effect of these events on
the project.



                                       8
<PAGE>


     In 1996, the Corporation completed the construction of a recycling and
     waste-to-energy project located in the Village of Robbins, Illinois (the
     "Robbins Facility"). By virtue of the Robbins Facility qualifying under the
     Illinois Retail Rate Law as a qualified solid waste-to-energy facility, it
     was to receive electricity revenues projected to be substantially higher
     than the utility's "avoided cost". Under the Retail Rate Law, the utility
     was entitled to a tax credit against a state tax on utility gross receipts
     and invested capital. The State of Illinois (the "State") was to be
     reimbursed by the Robbins Facility for the tax credit beginning after the
     20th year following the initial sale of electricity to the utility. The
     State repealed the Retail Rate Law insofar as it applied to the Robbins
     Facility. In October 1999, the Corporation reached an agreement (the
     "Robbins Agreement") with the holders of bonds issued by the Village of
     Robbins to finance the construction of the Robbins Facility (the
     "Bondholders"). As part of the Robbins Agreement, the Corporation agreed to
     continue to contest this repeal through litigation. Pursuant to the Robbins
     Agreement, the Corporation has also agreed that any proceeds of such
     litigation will be allocated in the following order of priority: (1) to
     redeem all of the outstanding 1999D Bonds, (2) to reimburse the Corporation
     for any amounts paid by it in respect of the 1999D Bonds (together with
     interest on the foregoing amounts at a rate of 10.6% per annum) and (3) to
     reimburse the Corporation for any costs incurred by it in connection with
     prosecuting the Retail Rate litigation (together with interest on the
     foregoing amounts at a rate of 10.6% per annum). Then, to the extent there
     are further proceeds, an amount equal to the amount distributed pursuant to
     the preceding clause (2) shall fund payments in respect of the Non-Recourse
     Robbins Bonds. Thereafter, 80% of any further proceeds shall fund payments
     on the Non-Recourse Robbins Bonds until an amount sufficient to repay such
     Bonds in full has been paid over, with the remaining 20% being paid over to
     the Corporation. After the foregoing payments shall have been made, any
     remaining proceeds shall be paid over to the Corporation.

     On December 1, 1999, three special purpose subsidiaries of the Corporation
     commenced reorganization proceedings under Chapter 11 of the U.S.
     Bankruptcy Code in order to effectuate the terms of the Robbins Agreement.
     On January 21, 2000, these subsidiaries' plan of reorganization was
     confirmed, and the plan was consummated on February 3, 2000.

     On August 8, 2000, the Corporation initiated the final phase of its exit
     from the Robbins Facility. As part of the Robbins Agreement, the
     Corporation had agreed to operate the Robbins Facility for the benefit of
     the bondholders for no more than 2 years or earlier if a buyer could be
     found for the plant, subject to being reimbursed for all costs of
     operation. Such reimbursement did not occur and, therefore, under the
     Robbins Agreement, the Corporation on October 10, 2000, completed the final
     phase of its exit from the project. The Corporation had been administering
     the project companies through a Delaware business trust, which owns the
     project on behalf of the bondholders. As a result of its exit from the
     project, the Corporation is no longer administering the project companies.
     At about this time, the project companies commenced new reorganization
     proceedings under Chapter 11 of the U.S. Bankruptcy Code. In May 2001, The
     Corporation reached agreement with the debtor project companies and the
     requisite holders of the bonds favorably resolving issues related to the
     exit from the project.

     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.


                                       9
<PAGE>


     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 acquired in 1995 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 not be made with respect to
     formerly owned properties, requiring 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 million.

     Several of the Corporation's former subsidiaries associated with the
     Robbins Facility received a Complaint for Injunction and Civil Penalties
     from the State of Illinois, dated April 28, 1998 (amended in July 1998)
     alleging primarily state air violations at the Robbins Facility (PEOPLE OF
     THE STATE OF ILLINOIS V. FOSTER WHEELER ROBBINS, INC., filed in Circuit
     Court of Cook County, Illinois, County Department, Chancery Division). The
     United States Environmental Protection Agency commenced a related
     enforcement action at approximately the same time. (EPA-5-98-IL-12 and
     EPA-5-98-IL-13). Although the complaint seeks substantial civil penalties
     for numerous violations of up to $50.0 for each violation, with an
     additional penalty of $10.0 for each day of each violation, the maximum
     allowed under the statute, and an injunction against continuing violations,
     the relevant subsidiaries have reached a staff-level agreement in principle
     with the state on a Consent Decree that will resolve all violations. The
     Corporation's liability, if any, is not expected to be material.

     The Corporation has brought various project claims against customers for
     amounts in excess of the agreed contract price or amounts not included in
     the original contract price. These involve claims by the Corporation for
     additional costs arising from changes in the initial scope of work or from
     customer caused delays. The costs associated with these changes or customer
     caused delays include additional direct costs, such as increased labor or
     material costs as a result of the additional work, and also costs that are
     imposed by virtue of the delays in the project.

     The ultimate legal and financial liability in respect to all claims,
     lawsuits and proceedings cannot be estimated with certainty. As additional
     information concerning the estimates used become 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.


                                       10
<PAGE>



12.  Changes in equity for the three months ended March 30, 2001 were as
     follows:

<TABLE>
<CAPTION>

                                                                                                  ACCUMULATED
                                                                                                    OTHER
                                             COMMON STOCK             PAID-IN       RETAINED     COMPREHENSIVE
                                       SHARES          AMOUNT         CAPITAL       EARNINGS         LOSS
                                       ------          ------         -------       --------         ----

<S>                                  <C>           <C>            <C>            <C>           <C>
Balance December 29, 2000             40,747,668    $    40,748    $   200,963    $   241,250   $  (118,707)

Net earnings                                                                            8,105

Dividends paid - common                                                                (2,443)
Purchase of treasury stock
Foreign currency translation
    adjustment                                                                                      (17,716)
Cumulative effect on prior years
(to December 29, 2000) of
    change in accounting
    principle for derivatives, net
    of tax                                                                                            6,300
Current period declines in fair
value, net of tax                                                                                    (5,645)
Reclassification to earnings                                                                           (700)

Stock option exercise price
    and par value                         56,500             56            475

Shares issued under incentive
    plan and other plans                                                     6
                                     -----------    -----------    -----------    -----------   -----------

Balance March 30, 2001                40,804,168    $    40,804    $   201,444    $   246,912   $  (136,468)
                                     ===========    ===========    ===========    ===========   ===========





                                                                       TOTAL
                                            TREASURY STOCK         STOCKHOLDERS'
                                         SHARES          AMOUNT       EQUITY
                                         ------          ------       ------


Balance December 29, 2000                (24,616)   $      (165)   $   364,089

Net earnings                                                             8,105

Dividends paid - common                                                 (2,443)
Purchase of treasury stock                (3,000)           (37)           (37)
Foreign currency translation
    adjustment                                                         (17,716)
Cumulative effect on prior years
(to December 29, 2000) of
    change in accounting
    principle for derivatives, net
    of tax                                                               6,300
Current period declines in fair
value, net of tax                                                       (5,645)
Reclassification to earnings                                              (700)
Stock option exercise price
    and par value                                                          531

Shares issued under incentive
    plan and other plans                   3,008             20             26
                                     -----------    -----------    -----------

Balance March 30, 2001                   (24,608)   $      (182)   $   352,510
                                     ===========    ===========    ===========


</TABLE>



                                       11
<PAGE>


13.      Major Business Groups
<TABLE>
<CAPTION>

                                                       THREE MONTHS ENDED
                                                 MARCH 30, 2001   MARCH 31, 2000
                                                 --------------   --------------

ENGINEERING & CONSTRUCTION
--------------------------
<S>                                                   <C>             <C>
       Revenues                                       $ 473,552       $ 615,964
       Gross earnings from operations                    41,122          46,387
       Interest expense                                     250             642
       Earnings before income taxes                      18,800          20,004

ENERGY EQUIPMENT
----------------
       Revenues                                       $ 238,635       $ 232,823
       Gross earnings from operations                    33,595          33,459
       Interest expense                                   6,074           9,018
       Earnings before income taxes                       9,753           9,364

CORPORATE AND FINANCIAL SERVICES (1)
------------------------------------
       Revenues                                       $ (13,952)      $ (12,491)
       Gross earnings from operations                       242             632
       Interest expense (2)                              14,441           9,751
       Loss before income taxes                         (18,046)        (15,679)

TOTAL
-----
       Revenues                                       $ 698,235       $ 836,296
       Gross earnings from operations                    74,959          80,478
       Interest expense (2)                              20,765          19,411
       Earnings before income taxes                      10,507          13,689
       Provision for income taxes                         2,402           5,317
                                                      ---------       ---------

       Net earnings                                   $   8,105       $   8,372
                                                      =========       =========


<FN>

(1)    Includes intersegment eliminations.
(2)    Includes dividend on Preferred Trust Securities.
</FN>
</TABLE>



                                       12
<PAGE>






14.  Consolidating Financial Information

     The following represents summarized consolidating financial information as
     of March 30, 2001 and December 29, 2000, with respect to the financial
     position, and for the three months ended March 30, 2001, and March 31,
     2000, 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, because management does not believe
     that such separate financial statements and related disclosures would be
     material to investors. None of the subsidiary guarantors are restricted
     from making distributions to the Corporation.
<TABLE>
<CAPTION>


                           FOSTER WHEELER CORPORATION
                      CONDENSED CONSOLIDATING BALANCE SHEET
                            (In Thousands of Dollars)

                                 March 30, 2001

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

<S>                                         <C>            <C>           <C>           <C>            <C>
Current assets                              $   403,865    $   514,739   $ 1,485,003   $  (846,256)   $ 1,557,351
Investment in subsidiaries                      911,934        311,739       114,196    (1,337,869)          --
Land, buildings & equipment (net)                47,409         25,219       416,614        (6,020)       483,222
Notes and accounts receivable - long-term        48,363          3,741       331,941      (307,336)        76,709
Intangible assets (net)                            --           85,358       196,181         1,276        282,815
Other non-current assets                        753,770          5,734       187,408        40,255        987,167
                                            -----------    -----------    ----------   -----------    -----------

TOTAL ASSETS                                $ 2,165,341    $   946,530   $ 2,731,343   $(2,455,950)   $ 3,387,264
                                            ===========   ===========   ===========    ===========    ===========

       LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities                         $   510,741    $   478,903   $ 1,186,239   $  (846,256)   $ 1,329,627
Long-term debt                                  359,190           --         391,846      (137,012)       614,024
Other non-current liabilities                   657,560          9,081       255,526      (116,404)       805,763
Subordinated Robbins Obligations                110,340                                                   110,340
Preferred trust securities                      175,000           --         175,000      (175,000)       175,000
                                            -----------    -----------    ----------   -----------    -----------

TOTAL LIABILITIES                             1,812,831        487,984     2,008,611    (1,274,672)     3,034,754
TOTAL STOCKHOLDERS'
    EQUITY                                      352,510        458,546       722,732    (1,181,278)       352,510
                                            -----------    -----------    ----------   -----------    -----------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                     $ 2,165,341    $   946,530   $ 2,731,343   $(2,455,950)   $ 3,387,264
                                            ===========    ===========   ===========   ===========    ===========
</TABLE>



                                       13
<PAGE>

<TABLE>
<CAPTION>


                           FOSTER WHEELER CORPORATION
                      CONDENSED CONSOLIDATING BALANCE SHEET
                            (In Thousands of Dollars)

                                December 29, 2000


                                                           Guarantor    Non-Guarantor
          ASSETS                               FWC       SUBSIDIARIES   SUBSIDIARIES ELIMINATIONS  CONSOLIDATED
          ------                               ---       ------------   ------------ ------------  ------------

<S>                                        <C>           <C>           <C>           <C>            <C>
Current assets                             $   391,560   $   497,486   $ 1,571,314   $  (837,384)   $ 1,622,976
Investment in subsidiaries                     918,582       317,663       139,008    (1,375,253)
Land, buildings & equipment (net)               46,621        26,455       428,080        (6,122)       495,034
Notes and accounts receivable -
   long-term                                    48,203         5,245       330,867      (308,077)        76,238
Intangible assets (net)                           --          85,977       202,158          --          288,135
Other non-current assets                       754,246         5,735       193,070        42,094        995,145
                                           -----------   -----------   -----------   -----------    -----------

TOTAL ASSETS                               $ 2,159,212   $   938,561   $ 2,864,497   $(2,484,742)   $ 3,477,528
                                           ===========   ===========   ===========   ===========    ===========

      LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities                        $   543,360   $   470,835   $ 1,277,792   $  (837,384)   $ 1,454,603
Long-term debt                                 309,190          --         389,173      (137,058)       561,305
Other non-current liabilities                  657,233         9,081       263,435      (117,558)       812,191
Subordinated Robbins obligations               110,340                                                  110,340
Preferred trust securities                     175,000          --         175,000      (175,000)       175,000
                                           -----------   -----------   -----------   -----------    -----------

TOTAL LIABILITIES                            1,795,123       479,916     2,105,400    (1,267,000)     3,113,439
TOTAL STOCKHOLDERS'
    EQUITY                                     364,089       458,645       759,097    (1,217,742)       364,089
                                           -----------   -----------   -----------   -----------    -----------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                    $ 2,159,212   $   938,561   $ 2,864,497   $(2,484,742)   $ 3,477,528
                                           ===========   ===========   ===========   ===========    ===========



</TABLE>




                                       14
<PAGE>
<TABLE>
<CAPTION>


                           FOSTER WHEELER CORPORATION
                  CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
                            (In Thousands of Dollars)

                        Three Months Ended March 30, 2001

                                                                Guarantor       Non-Guarantor
                                                  FWC          SUBSIDIARIES     SUBSIDIARIES        ELIMINATIONS       CONSOLIDATED

<S>                                             <C>            <C>                <C>               <C>                  <C>
 Operating revenues                                             $ 163,480          $ 581,954           $  (62,791)       $ 682,643
 Other Income                                    $4,075             2,840             21,788              (13,111)          15,592
                                                 ------         ---------          ---------          -----------        ---------
     Total revenues                               4,075           166,320            603,742              (75,902)         698,235


 Cost of operating revenues                          -            153,761            516,715              (62,791)         607,685

 Selling, general and administrative
  expenses                                       2 ,621            13,268             35,508              -                 51,397


 Other deductions and minority
   interests(*)                                  10,969             1,471             29,317              (13,111)          28,646

 Equity in net earnings of subsidiaries          14,600            (5,964)                                 (8,636)
                                                 ------         ---------          ---------          -----------        ---------

 Earnings/(loss) before income taxes              5,085            (8,144)            22,202               (8,636)          10,507

 (Benefit)/provision for income taxes            (3,020)             (803)             6,225                  -              2,402
                                                 ------         ---------          ----------         -----------        ---------

 Net earnings/(loss)                              8,105            (7,341)            15,977               (8,636)           8,105

 Other comprehensive loss:
  Foreign currency translation
  adjustment                                    (17,716)           (5,202)           (15,679)              20,881          (17,716)

Changes in unrealized gains/(loss) on
  derivative instruments, net of tax                                3,399             (9,744)                               (6,345)

Cumulative effect on prior years (to
  December 29, 2000) of change in
  accounting principle for derivatives,
  net of tax                                                        3,535              2,765                                 6,300
                                                -------          --------           --------           ----------        ---------

Comprehensive loss                            $  (9,611)         $ (5,609)           $(6,681)          $   12,245       $   (9,656)
                                              =========          ========           ========           ==========       ==========


<FN>

(*) Includes interest expense and dividends on preferred securities of $20,765.
</FN>
</TABLE>


                                       15
<PAGE>

<TABLE>
<CAPTION>


                           FOSTER WHEELER CORPORATION
                  CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
                            (In Thousands of Dollars)

                        Three Months Ended March 31, 2000


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

<S>                                       <C>           <C>          <C>          <C>          <C>
 Operating revenues                                    $ 259,806    $ 629,457    $ (67,227)   $ 822,036
 Other income                             $   4,551          609       22,572      (13,472)      14,260
                                          ---------    ---------    ---------    ---------    ---------

      Total revenues                          4,551      260,415      652,029      (80,699)     836,296

 Cost of operating revenues                              243,098      565,687      (67,227)     741,558

 Selling, general and administrative
    expenses                                  4,902       12,165       37,034                    54,101
 Other deductions and minority
   interest(*)                               15,531        1,065       23,824      (13,472)      26,948

 Equity in net earnings of subsidiaries      19,079        2,618                   (21,697)
                                          ---------    ---------    ---------    ---------    ---------

 Earnings/ (loss) before income taxes         3,197        6,705       25,484      (21,697)      13,689

 (Benefit)/provision for income taxes        (5,175)       1,693        8,799                     5,317
                                          ---------    ---------    ---------    ---------    ---------

 Net earnings/(loss)                          8,372        5,012       16,685      (21,697)       8,372

 Other comprehensive loss:
  Foreign currency translation
  adjustment                                (12,115)      (5,304)      (9,962)      15,266      (12,115)
                                          ---------    ---------    ---------    ---------    ---------


 Comprehensive (loss)/earnings            $  (3,743)   $    (292)   $   6,723    $  (6,431)   $  (3,743)
                                          =========    =========    =========    =========    =========
<FN>

(*) Includes interest expense and dividends on preferred securities of $19,411.
</FN>
</TABLE>






                                       16
<PAGE>
<TABLE>
<CAPTION>



                           FOSTER WHEELER CORPORATION
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
                            (In Thousands of Dollars)

                        Three Months Ended March 30, 2001

                                                    GUARANTOR    NON-GUARANTOR
                                           FWC     SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                           ---     ------------   ------------  ------------ -------------
CASH FLOWS FROM OPERATING
     ACTIVITIES
NET CASH (USED)/PROVIDED BY
<S>                                     <C>          <C>          <C>          <C>          <C>
   OPERATING ACTIVITIES                 $  (1,659)   $ (64,083)   $  (8,960)   $   6,633    $ (68,069)
                                        ---------    ---------    ---------    ---------    ---------

CASH FLOWS FROM INVESTING
   ACTIVITIES
Capital expenditures                                      (484)      (8,525)                   (9,009)
Proceeds from sale of properties                                        259                       259
Decrease/(increase) in investment and
advances                                    1,671                    10,209       (4,293)       7,587
Increase in short-term investments                                     (804)                     (804)
Other                                                                   (91)      (1,276)      (1,367)
                                        ---------    ---------    ---------    ---------    ---------
NET CASH PROVIDED/(USED) BY
   INVESTING ACTIVITIES                     1,671         (484)       1,048       (5,569)      (3,334)
                                        ---------    ---------    ---------    ---------    ---------

CASH FLOWS FROM FINANCING
   ACTIVITIES
Dividends to Stockholders                  (2,443)                                             (2,443)
Increase in short-term debt                                           5,160                     5,160
Proceeds from long-term debt               50,000                        12                    50,012
Repayment of long-term debt                                          (4,300)                   (4,300)
Other                                     (67,994)      63,340        6,212       (1,064)         494
                                        ---------    ---------    ---------    ---------    ---------
NET CASH (USED)/PROVIDED BY
   FINANCING ACTIVITIES                   (20,437)      63,340        7,084       (1,064)      48,923
                                        ---------    ---------    ---------    ---------    ---------

Effect of exchange rate changes on
   Cash and cash equivalents                                        (10,483)                  (10,483)
DECREASE IN CASH AND CASH EQUIVALENTS     (20,425)      (1,227)     (11,311)                  (32,963)
Cash and cash equivalents,
beginning of period                        30,976        2,187      158,730                   191,893
                                        ---------    ---------    ---------    ---------    ---------
CASH AND CASH EQUIVALENTS, END OF
   PERIOD                               $  10,551    $     960    $ 147,419    $       0    $ 158,930
                                        =========    =========    =========    =========    =========

</TABLE>



                                       17
<PAGE>

<TABLE>
<CAPTION>


                           FOSTER WHEELER CORPORATION
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
                            (In Thousands of Dollars)

                        Three Months Ended March 31, 2000

                                                      GUARANTOR    NON-GUARANTOR
                                               FWC  SUBSIDIARIES    SUBSIDIARIES  ELIMINATIONS   CONSOLIDATED
                                               ---  ------------    ------------  ------------   ------------
CASH FLOWS FROM OPERATING
   ACTIVITIES
NET CASH (USED)/ PROVIDED BY
<S>                                       <C>          <C>          <C>          <C>          <C>
   OPERATING ACTIVITIES                   $ (25,187)   $  30,396    $   1,998    $  11,434    $  18,641
                                          ---------    ---------    ---------    ---------    ---------

CASH FLOWS FROM INVESTING
   ACTIVITIES
Capital expenditures                                      (2,349)      (8,859)                  (11,208)
Proceeds from sale of properties                                          798                       798
(Increase)/decrease in
investment and advances                        (820)                   (5,889)      12,025        5,316
Decrease in short-term
   Investments                                                          1,982                     1,982
Other                                                                  (2,599)                   (2,599)
                                          ---------    ---------    ---------    ---------    -----------
NET CASH (USED)/PROVIDED BY
   INVESTING ACTIVITIES                        (820)      (2,349)     (14,567)      12,025       (5,711)
                                          ---------    ---------    ---------    ---------    -----------

CASH FLOWS FROM FINANCING
   ACTIVITIES
Dividends to Stockholders                    (2,443)                                             (2,443)
Increase in short-term debt                                            22,569                    22,569
Proceeds from long-term debt                                            3,321                     3,321
Repayment of long-term debt                 (10,000)                   (4,067)                  (14,067)
Other                                        31,747      (28,491)      20,120      (23,459)         (83)
                                          ---------    ---------    ---------    ---------    -----------
NET CASH PROVIDED/(USED) BY
   FINANCING ACTIVITIES                      19,304      (28,491)      41,943      (23,459)       9,297
                                          ---------    ---------    ---------    ---------    -----------

Effect of exchange rate
changes on cash and cash                                               (4,780)                   (4,780)
equivalents
(DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS                         (6,703)        (444)      24,594                    17,447
Cash and cash equivalents,
  beginning of period                        16,262        3,080      150,926                   170,268
                                          ---------    ---------    ---------    ---------    -----------
CASH AND CASH EQUIVALENTS, END OF
  PERIOD                                  $   9,559    $   2,636    $ 175,520    $       0    $ 187,715
                                          =========    =========    =========    =========    ===========



</TABLE>



                                       18
<PAGE>



15.     The Corporation owns a non-controlling equity interest in four
        cogeneration projects; three 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.
<TABLE>
<CAPTION>

                                                     MARCH 30, 2001    DECEMBER 29, 2000
                                                     --------------    -----------------
           BALANCE SHEET DATA:
           -------------------
<S>                                                      <C>               <C>
           Current assets                                $  91,718         $   146,277
           Other assets (primarily buildings
                and equipment)                             574,266             603,665
           Current liabilities                              34,701              48,604
           Other liabilities (primarily long-
                term debt)                                 477,808             529,182
           Net assets                                      153,475             172,156

           INCOME STATEMENT DATA FOR THREE MONTHS:
           ---------------------------------------
                                                     MARCH 30, 2001      MARCH 31, 2000
                                                     --------------      --------------
           Total revenues                                $  56,046           $  52,213
           Income before income taxes                       10,984              14,163
           Net earnings                                      7,810               9,367
</TABLE>

     As of March 30, 2001, the Corporation's share of the net earnings and
     investment in the equity affiliates totaled $4,696 and $116,417,
     respectively. Dividends of $1,914 were received during the first three
     months of 2001. The Corporation has guaranteed certain performance
     obligations of such projects. The Corporation's contingent obligations
     under such guarantees are approximately $2,000 per year for the four
     projects. The Corporation has provided a $10,000 debt service reserve
     letter of credit providing liquidity for debt service payments. No amount
     has been drawn under the letter of credit.

     In April, 2001 the Corporation successfully completed the sale of it's
     interest in two hydrogen production plants in South America. The net
     proceeds from these transactions was approximately $40.0 million. An after
     tax loss of $5.0 million, or approximately $.12 per share, will be recorded
     in the second quarter relating to these sales.


     16. The difference between the statutory and effective tax rate is
     predominately due to state and local taxes, certain tax credits and the
     favorable settlement of a contested foreign tax liability.



                                       19
<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 2000 Form 10-K.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 30, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2000

                                            CONSOLIDATED DATA

                                                  THREE MONTHS ENDED
                                                  ------------------
                                          MARCH 30, 2001          MARCH 31, 2000
                                          --------------          --------------

                 Backlog                     $   6,250.5            $6,290.6
                                             ===========            ========
             New orders                      $     950.5            $1,191.9
                                             ===========            ========
             Revenues                        $     698.2            $  836.3
                                             ===========            =========
             Net earnings                    $       8.1            $    8.4
                                             ============           ==========


The Corporation's consolidated backlog at March 30, 2001 totaled $6,250.5, which
represented a decrease of 1% from the amount reported as of March 31, 2000. As
of March 30, 2001, 43% of the consolidated backlog was from lump-sum work, 65%
of which was for the Energy Equipment Group, and 57% was from reimbursable work.
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 to be performed in a given
year. Backlog is adjusted to reflect project cancellations, deferrals, sale of
subsidiaries and revised project scope and cost. This adjustment for the three
months ended March 30, 2001 was $15.9, compared with $51.5 for the three months
ended March 31, 2000. Furthermore, because of the large size and uncertain
timing of projects, future trends are difficult to predict.

New orders awarded for the three months ended March 30, 2001 were $950.5
compared to $1,191.9 for the period ended March 31, 2000, a reduction of
approximately 20%. Approximately 38% of new orders booked in the three months
ended March 30, 2001 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 three months ended March 30, 2001
were the United States, Europe and Asia. The reduction was due to lower activity
in both the Engineering and Construction and the Energy Equipment Groups.

Operating revenues decreased 17% in the three months ended March 30, 2001
compared to the three months ended March 31, 2000 to $682.6 from $822.0. This
reduction was primarily due to lower activity in the Engineering and
Construction Group.

Gross earnings, which are equal to operating revenues minus the cost of
operating revenues, decreased by $5.5 in the three months ended March 30, 2001
as compared with the three months ended March 31, 2000 to $75.0 from $80.5. This
reduction was due to lower operating revenues in the Engineering and
Construction Group.


                                       20
<PAGE>


Selling, general and administrative expenses decreased by 5% in the three months
ended March 30, 2001 as compared with the same period in 2000, from $54.1 to
$51.4. This reduction partially relates to the Corporation's 1999 Cost
Realignment Plan.

Other income in the three months ended March 30, 2001 increased to $15.6 from
$14.3 for the period ended March 31, 2000. This increase can be primarily
related to interest income ($.7) and foreign transaction gains ($.5).

Other deductions and dividends on the Preferred Trust Securities for the three
months ended March 30, 2001 were $0.9 higher than that reported in the three
months ended March 31, 2000. The increase primarily relates to higher interest
expense.

Net earnings for the three months ended March 30, 2001 were $8.1 or $.20 per
share diluted compared to net earnings of $8.4 or $.21 diluted per share for the
three months ended March 31, 2000. The decrease relates to lower earnings before
taxes ($3.2) due to lower operating revenues, offset by a lower tax provision
($2.9) relating to certain tax credits and the favorable settlement of a
contested foreign tax liability.

ENGINEERING AND CONSTRUCTION GROUP
                                                        THREE MONTHS ENDED
                                                        ------------------
                                                MARCH 30, 2001    MARCH 31, 2000
                                                --------------    --------------

            Backlog                                $ 4,522.5         $4,836.1
                                                  ==========         ========
            New orders                            $    577.0         $ 766.9
                                                  ==========         =======
            Operating revenues                    $    465.9         $ 608.2
                                                  ==========         =======
            Gross earnings from operations        $     41.1         $  46.4
                                                  ===========         ======

The Engineering and Construction Group ("E&C Group"), had a backlog of $4,522.5
at March 30, 2001, which represented a decrease of $313.6 from March 31, 2000.
New orders booked for the three month period ended March 30, 2001 decreased by
25% compared with the period ended March 31, 2000. This decrease reflects lower
new orders in the United States, Spain, France and Italy, which were partially
offset by increased activity in the United Kingdom.

Operating revenues for the three month period ended March 30, 2001 decreased 23%
compared to the three month period ended March 31, 2000. Gross earnings from
operations decreased by 11% for the three month period ended March 30, 2001,
compared with the corresponding period ended March 31, 2000. Both the operating
revenues and gross earnings decrease can be associated with lower activity in
the United States, France and Italy.



                                       21
<PAGE>



ENERGY EQUIPMENT GROUP
                                                         THREE MONTHS ENDED
                                                         ------------------
                                                MARCH 30, 2001    MARCH 31, 2000
                                                --------------    --------------

           Backlog                                 $   1,839.5        $1,581.2
                                                   ===========        ========
           New orders                              $     378.9         $ 425.5
                                                   ===========         =======
           Operating revenues                      $     230.3         $ 224.4
                                                   ===========         =======
           Gross earnings from operations          $      33.6         $  33.5
                                                   ===========         =======

The Energy Equipment Group had a backlog of $1,839.5 at March 30, 2001, which
represented a 16% increase from March 31, 2000, due primarily to the high amount
of orders awarded in the year 2000. Approximately 17% of the Energy Equipment
Group's backlog as of March 30, 2001 represents orders from Asia. These orders,
which are supported by financing agreements guaranteed by the United States and
Finland, are for large utility size boilers. New orders booked for the three
month period ended March 30, 2001 decreased by 11% from corresponding periods in
2000. This decrease is primarily due to a large order from Poland that was
received in the first quarter of 2000. Operating revenues for the three month
period ended March 30, 2001 increased by 3%. Gross earnings from operations were
approximately the same for the three month period ended March 30, 2001 compared
with the period ended March 31, 2000.

As previously disclosed, the Corporation has reviewed various methods of
monetizing selected Power Systems facilities. Based on current economic
conditions, the Management concluded that it would continue to operate the
facilities in the normal course of business. Management has reviewed these
facilities for impairment on an undiscounted cash flow basis and determined that
no adjustment to the carrying amounts is required. However, if conditions were
to change, monetization might again become a viable option. It is possible that
the amounts realized could differ materially from the balances in the financial
statements.

FINANCIAL CONDITION

Stockholders' equity for the three months ended March 30, 2001 decreased by
$11.5, due primarily to changes in the foreign currency translation adjustment
of $17.7 and dividends paid of $2.4, offset by net earnings of $8.1.

During the three months ended March 30, 2001, long-term investments in land,
buildings and equipment were $9.0 as compared with $11.2 for the comparable
period in 2000. During the first three months of 2000, approximately $5.5 was
invested in waste-to-energy projects in Italy, versus $1.7 in 2001.

Corporate and other debt, special purpose project debt and bank loans net of
cash and short term investments increased by $81.9 since December 29, 2000, as a
result of slow payment by certain customers and unfavorable payment terms on
certain contracts.






                                       22
<PAGE>


Our corporate and other debts, including the revolving credit agreements, are as
follows:

                                                       March 30,   December 29,
                                                         2001          2000
                                                      ----------  -------------

Corporate and other debt consisted of the following:
     Revolving Credit Agreements (average
     interest rate 7.65%)                                  $135.0       $  85.0
     6.75% Notes due November 15, 2005                      200.0         200.0
     Other.........................................          28.3          21.2
                                                           ------       -------
                                                           $363.3        $306.2
Less, Current portion                                          .1            .2
                                                          -------      --------
                                                           $363.2        $306.0
                                                           ======        ======
Principal payments are payable in annual installments of:
     2002...........................................                    $  20.6
     2003...........................................                       85.2
     2004...........................................                         .1
     2005...........................................                      200.0
     2006...........................................                         .1
                                                                        -------
                                                                         $306.0


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. The
agreement contains certain covenants and provides for various events of
termination. At March 30, 2001 and December 29, 2000, $50.0 in receivables were
sold under the agreement and are therefore not reflected in the accounts
receivable - trade balance in the Consolidated Balance Sheet.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $158.9 at March 30, 2001, a decrease of $33.0
from fiscal year end 2000. Short-term investments increased by $0.8 to $2.6.
During the first quarter of fiscal 2001, the Corporation paid $2.4 in dividends
to stockholders. Cash used by operating activities for working capital needs
amounted to $68.1, of which $54.0 was utilized by the Engineering and
Construction Group and $15.9 was utilized by the Energy Equipment Group. The
Corporation's working capital varies from period to period depending on the mix,
stage of completion and commercial terms and conditions of the Corporation's
contracts. Working capital needs have increased during the past several years
because of the need to give customers more favorable payment terms under
contracts to compete successfully for certain projects. Those requests generally
include lower advance payments and less favorable payment schedules. In the
future, the working capital needs will increase as unfilled orders continue to
grow. It is expected that these less favorable payment terms, together with our
customer delays in payment and the growth in business, will continue to put
pressure on the short-term borrowing needs of the Corporation.

Management of the Corporation believes that cash and cash equivalents of $158.9
and short-term investments of $2.6 at March 30, 2001, when combined with cash
flows from operating activities, amounts available under its Revolving Credit
Agreements and access to third-party financing 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 $300.0 of debt, equity, and other securities,
$175.0 of which has been issued as of March 30, 2001.



                                       23
<PAGE>


The Corporation's liquidity has been negatively impacted by a number of claims
relating to projects that have been affected by substantial scope of work
changes and other adverse factors. The net exposure associated with these
claims, which have accumulated over a period of time, approximate $175.0 at
March 30, 2001. While the future collections of these claims will increase cash
inflows, the timing of collection of such claims is subject to uncertainty of
recoverability as described in note 2 to the financial statements.

At March 30, 2001, the Corporation had a receivable of approximately $11.0 from
Pacific Gas and Electric Company, a wholly owned utility subsidiary of PG&E
Corporation, which recently petitioned the courts for protection under Federal
Bankruptcy Laws. While the Corporation believes this receivable will be
collected, the ultimate timing of the collection is uncertain and an appropriate
reserve has been established.

In April, 2001 the Corporation successfully completed the sale of it's interest
in two hydrogen production plants in South America. The net proceeds from these
transactions was approximately $40.0 An after tax loss of $5.0, or approximately
$.12 per share, will be recorded in the second quarter relating to these sales.

The Corporation is reviewing various methods to monetize certain assets in order
to concentrate on reducing both corporate and project debt and improving cash
flow.

CORPORATE REORGANIZATION

On November 28, 2000, the Corporation's board of directors approved a
reorganization that will effectively result in the Corporation becoming a
Bermuda corporation. On April 23, 2001, the Corporation's shareholders approved
the reorganization. The Corporation believes that a significant portion of its
business is, and will be, generated from non-U.S. markets. This reorganization
will provide financial and other business advantages that are not available
under the current corporate structure. By aligning the structure with the
business operations, it should promote operational efficiencies, including
improvements in global cash management. The reorganization should provide a more
favorable corporate and regulatory structure for expansion of current and future
business opportunities. The reorganization may also facilitate access to
financing sources outside of the United States and broaden the investor base by
making the stock more attractive to non-U.S. investors. In addition, the
reorganization should provide greater flexibility over the long-term in seeking
to improve the worldwide effective tax rate.

Pursuant to the plan of reorganization, Foster Wheeler Corporation shareholders
will receive the equivalent number of shares in the newly formed company, Foster
Wheeler Ltd., organized in Bermuda. The shares will be listed on the New York
Stock Exchange under "FWC", the same symbol under which the Corporation's common
stock is currently listed. The reorganization is subject to certain conditions
to closing. Additional information relating to the reorganization can be
obtained by referring to the Corporation's Form S-4/A Registration No.
333-52468.



                                       24
<PAGE>




OTHER MATTERS

On April 2, 2001, the Corporation announced the retirement by the end of the
year of Richard J. Swift, its Chairman, President, and Chief Executive Officer.
As a result of this retirement, the Corporation will incur an after tax charge
of approximately $1.6, or $.04 per share, which will be recorded in the second
quarter.

During the year 2000, the pension plan assets of the Corporation declined
substantially due to the performance of the stock market. In addition, the
anticipated return on these assets for the year was less than expected. Because
of these factors, the actual pension expense for 2001 will be higher than
previously forecasted, which will result in an additional charge to net earnings
after tax of $3.2 million, or $.08 per share for the year. Of this amount,
approximately $1.2 or $.03 per share, will be recorded in the second quarter.

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 processes.



                                       25
<PAGE>


ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        (MILLIONS OF DOLLARS)


Management's strategy for managing transaction risks associated with currency
fluctuations is for each operating unit to enter into derivative transactions,
such as forward foreign exchange agreements, to hedge its exposure on contracts
into the operating unit's functional currency. The Corporation utilizes all such
financial instruments solely for hedging. Corporate policy prohibits the
speculative use of such instruments. The Corporation is exposed to credit loss
in the event of nonperformance by the counter parties to such financial
instruments. To minimize this risk, the Corporation enters into these financial
instruments with financial institutions that are primarily rated A or better by
Standard & Poor's or A2 or better by Moody's. Management believes that the
geographical diversity of the Corporation's operations mitigates the effects of
the currency translation exposure. No significant unhedged assets or liabilities
are maintained outside the functional currency of the operating subsidiaries.
Accordingly, translation exposure is not hedged.

Interest Rate Risk - The Corporation is exposed to changes in interest rates
primarily as a result of its borrowings under its Revolving Credit Agreements
and its variable rate project debt. If market rates average 1% more in 2001 than
in 2000, the Corporation's interest expense for the next twelve months would
increase, and income before tax would decrease by approximately $4.2. This
amount has been determined by considering the impact of the hypothetical
interest rates on the Corporation's variable-rate balances as of March 30, 2001.
In the event of a significant change in interest rates, management would likely
take action to further mitigate its exposure to the change. However, due to
uncertainty of the specific actions that would be taken and their possible
effects, the sensitivity analysis assumes no changes in the Corporation's
financial structure.

Foreign Currency Risk - The Corporation has significant overseas operations.
Generally, all significant activities of the overseas affiliates are recorded in
their functional currency, which is generally the currency of the country of
domicile of the affiliate. This results in a mitigation of the potential impact
of earnings fluctuations as a result of changes in foreign exchange rates. In
addition in order to further mitigate risks associated with foreign currency
fluctuations, the affiliates of the Corporation enter into foreign currency
exchange contracts to hedge the exposed contract value back to their functional
currency. As of March 30, 2001, the Corporation had approximately $416.0 of
foreign exchange contracts outstanding. These contracts mature between 2001 and
2004. Approximately 15% of these contracts require a domestic subsidiary to sell
Japanese yen and receive U.S. dollars. The remaining contracts have been
established by various international subsidiaries to sell a variety of
currencies and either receive their respective functional currency or other
currencies for which they have payment obligations to third parties. The
Corporation does not enter into foreign currency contracts for speculative
purposes.

INFLATION

The effect of inflation on the Corporation's revenues and earnings is minimal.
Although a majority of the Corporation's revenues are made under long-term
contracts, the selling prices of such contracts, established for deliveries in
the future, generally reflect estimated costs to complete in these future
periods. In addition, some contracts provide for price adjustments through
escalation clauses.



                                       26
<PAGE>




SAFE HARBOR STATEMENT
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this 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:

o    changes in the rate of economic growth in the United States and other major
     international economies,
o    changes in investment by the energy, power and environmental industries,
o    changes in regulatory environment,
o    changes in project schedules,
o    changes in trade, monetary and fiscal policies worldwide,
o    currency fluctuations,
o    outcomes of pending and future litigation, including litigation regarding
     the Corporation's liability for damages and insurance coverage for asbestos
     exposure,
o    protection and validity of patents and other intellectual property rights
     and
o    increasing competition by foreign and domestic companies.

For additional information about the Corporation, see the Corporation's reports
on Forms 10-K, 10K/A, 10-Q and 8-K filed with the Securities and Exchange
Commission from time to time.


                                       27
<PAGE>


PART II   OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

           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 surrounding such claims and of its insurance coverage for such
claims, if any, 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 for in the accounts.


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 March 30, 2001, there were
approximately 102,800 claims pending. During the first quarter of 2001,
approximately 13,300 new claims have been filed and approximately 2,600 were
either settled or dismissed without payment. The amount spent on asbestos
litigation defense and case resolution, substantially all of which was
reimbursed or will be reimbursed from insurance coverage was $8.9 million in the
first quarter of 2001.


The Corporation continues to actively manage the claims and to negotiate with
certain insurance carriers concerning the limits of coverage provided during
different time periods. An agreement the Corporation has had with a number of
insurers to allow for efficient and thorough handling of claims was terminated
by one of the participant insurers with respect to claims filed after June 12,
2001. As a result in the first quarter of 2001, lawsuits commenced among the
Corporation and certain of the insurers to determine the respective rights and
responsibilities under the policies going forward. The Corporation is currently
in negotiations with the insurers, and the Corporation believes that it will
enter into a similar replacement arrangement to govern the management of, and
allocation of payments on, asbestos related claims filed after June 12, 2001.
The Corporation anticipates that the existing insurance policies are adequate
whether or not the Corporation can agree on a new arrangement. Although the
expiration of the previous arrangement may delay the ability of the Corporation
to get reimbursed on a timely basis by the insurers for claims filed after June
12, 2001, the Corporation policies will continue to cover asbestos related
claims brought against the Corporation after June 12, 2001 and it is anticipated
that the Corporation can continue to manage the resolution of such claims
without a material adverse impact on the Corporation's financial condition.


 The Corporation has recorded an asset relating to probable insurance recoveries
and a liability related to probable losses. The Corporation's ability to
continue to recover its costs or any portion thereof relating to the defense and
payment of these claims is uncertain and dependent on a number of factor
including the financial solvency of the insurers, some of which are currently
insolvent, including one insurer that has provided policies for a substantial
amount of coverage.


The Corporation's management after consultation with counsel, has considered the
litigation with the insurers described above, and the financial viability and
legal obligations of the insurance carriers and believe that except for those
insurers that have become or may become insolvent, the insurers or their
guarantors should continue to adequately fund claims and defense costs relating
to asbestos litigation.



                                       28
<PAGE>


The Corporation has been effective in managing the asbestos litigation in part
because (1) the Corporation has access to historical project documents and other
business records going back more than 50 years, allowing the Corporation to
defend itself by determining if it was present at the location that is the cause
of the alleged asbestos claim and, if so the timing and extent of the
Corporation's presence. (2) the Corporation maintains good records on its
insurance policies and have identified policies issued since 1952, and (3) the
Corporation has consistently and vigorously defended these claims which has
allowed the Corporation to dismiss claims that are without merit or to settle
claims at amounts that are considered reasonable.

On November 30, 1999, the United States District Court for the Northern District
of Texas handed down a final judgment in the case of KOCH ENGINEERING COMPANY,
INC. ET AL VS. GLITSCH, INC., ET AL. Glitsch, Inc. (now known as Tray, Inc.) is
an indirect subsidiary of the Corporation. This lawsuit, which claimed damages
for patent infringement and trade secret misappropriations, has been pending for
over 17 years. The judgment awarded compensatory damages of $20.9 million plus
prejudgment interest in an amount yet to be calculated by the Court and punitive
damages equal to 50% of compensatory damages, or approximately $10.5 million.
While the Court has not finally determined the amount of pre-judgement interest,
it has preliminarily ruled that pre-judgement interest on actual patent
infringement damages will be based on an annualized 90-day Treasury bill rate
calculation. The Court also ruled that post-judgement interest will be paid at a
rate of 5.471% on all actual damages from November 30, 1999 until paid. If the
Court adopts the plaintiff's pre-judgement interest calculations, the award of
pre-judgement interest could amount to approximately $14.8 million with respect
to the patient infringement damages and approximately $8.2 million for the trade
secret misappropriation. Tray, Inc. has various motions for relief from the
judgment which are presently pending before the trial court. Tray, Inc. believes
it has reasonable grounds to appeal the judgement as it has been advised by
counsel that the Court's decision contains numerous legal and factual errors
subject to reversal on appeal. While Tray, Inc. believes it has reasonable
grounds to prevail on appeal, the ultimate outcome cannot be determined.

In 1997, based on a 1994 United States Supreme Court decision, a federal circuit
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
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 service the
debt on outstanding bonds, which were issued to construct the plant and to
acquire a landfill for Camden County's use. These outstanding bonds are public
debt, not debt of the Corporation. The Corporation has filed suit against the
involved parties, including the State of New Jersey, seeking, among other
things, to void the applicable contracts and agreements governing this project.
Pending final outcome of the litigation and results of legislative initiatives
in New Jersey to resolve this crisis, management believes that the plant will
continue to operate at full capacity while receiving market rates for waste
disposal. At the same time, management cannot determine the ultimate effect of
these events on the project.

In 1996, the Corporation completed the construction of a recycling and
waste-to-energy project located in the Village of Robbins, Illinois (the
"Robbins Facility"). By virtue of the Robbins Facility qualifying under the
Illinois Retail Rate Law as a qualified solid waste-to-energy facility, it was
to receive electricity revenues projected to be substantially higher than the
utility's "avoided cost". Under the Retail Rate Law, the utility was entitled to
a tax credit against a state tax on utility gross receipts and invested capital.
The State of Illinois (the "State") was to be reimbursed by the Robbins Facility
for the tax credit beginning after the 20th year following the initial sale of
electricity to the utility. The State repealed the Retail Rate Law insofar as it
applied to the Robbins Facility. In October 1999, the Corporation reached an
agreement (the "Robbins Agreement") with the holders of bonds issued by the
Village of Robbins to finance the construction of the Robbins Facility (the
"Bondholders"). As part of the Robbins Agreement, the Corporation agreed to
continue to contest this repeal through litigation. Pursuant to the Robbins
Agreement, the Corporation has also agreed that any proceeds of such litigation
will be allocated in the following order of priority: (1) to redeem all of the
outstanding 1999D Bonds, (2) to reimburse the Corporation for any amounts paid
by it in respect of the 1999D Bonds (together with interest on the foregoing



                                       29
<PAGE>

amounts at a rate of 10.6% per annum) and (3) to reimburse the Corporation for
any costs incurred by it in connection with prosecuting the Retail Rate
litigation (together with interest on the foregoing amounts at a rate of 10.6%
per annum). Then, to the extent there are further proceeds, an amount equal to
the amount distributed pursuant to the preceding clause (2) shall fund payments
in respect of the Non-Recourse Robbins Bonds. Thereafter, 80% of any further
proceeds shall fund payments on the Non-Recourse Robbins Bonds until an amount
sufficient to repay such Bonds in full has been paid over, with the remaining
20% being paid over to the Corporation. After the foregoing payments shall have
been made, any remaining proceeds shall be paid over to the Corporation.

On December 1, 1999, three special purpose subsidiaries of the Corporation
commenced reorganization proceedings under Chapter 11 of the U.S. Bankruptcy
Code in order to effectuate the terms of the Robbins Agreement. On January 21,
2000, these subsidiaries' plan of reorganization was confirmed, and the plan was
consummated on February 3, 2000.

On August 8, 2000, the Corporation initiated the final phase of its exit from
the Robbins Facility. As part of the Robbins Agreement, the Corporation had
agreed to operate the Robbins Facility for the benefit of the bondholders for no
more than 2 years or earlier if a buyer could be found for the plant, subject to
being reimbursed for all costs of operation. Such reimbursement did not occur
and, therefore, under the Robbins Agreement, the Corporation on October 10,
2000, completed the final phase of its exit from the project. The Corporation
had been administering the project companies through a Delaware business trust,
which owns the project on behalf of the bondholders. As a result of its exit
from the project, the Corporation is no longer administering the project
companies. At about this time, the project companies commenced new
reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code. In May
2001, The Corporation reached agreement with the debtor project companies and
the requisite holders of the bonds favorably resolving issues related to the
exit from the project.

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 acquired in 1995 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



                                       30
<PAGE>

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 not be made with respect to
formerly owned properties, requiring 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 million.

Several of the Corporation's former subsidiaries associated with the Robbins
Facility received a Complaint for Injunction and Civil Penalties from the State
of Illinois, dated April 28, 1998 (amended in July 1998) alleging primarily
state air violations at the Robbins Facility (PEOPLE OF THE STATE OF ILLINOIS V.
FOSTER WHEELER ROBBINS, Inc., filed in Circuit Court of Cook County, Illinois,
County Department, Chancery Division). The United States Environmental
Protection Agency commenced a related enforcement action at approximately the
same time. (EPA-5-98-IL-12 and EPA-5-98-IL-13). 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 relevant subsidiaries have reached a staff-level agreement in
principle with the state on a Consent Decree that will resolve all violations.
The Corporation's liability, if any, is not expected to be material.

The Corporation's project claims have increased as a result of the increase in
our lump-sum contracts between 1992 and 1999. Project claims brought by us
against project owners for additional costs over the contract price or amounts
not included in the original contract price, typically arising from changes in
the initial scope of work or from owner-caused delays. These claims are often
subject to lengthy arbitration or litigation proceedings. The costs associated
with these changes or owner-caused delays include additional direct costs, such
as increased labor and material costs associated with the performance of the
additional works, as well as indirect costs that may arise due to delays in the
completion of the project, such as increased labor costs resulting from changes
in labor markets. The Corporation has used significant additional working
capital in projects with costs overruns pending the resolution of the relevant
project claims. The Corporation cannot assure that project claims will not
continue to increase.

In the ordinary course of business, the Corporation enters 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 or plant construction. Based
on the Corporation's knowledge of the facts and circumstances relating to the
liabilities, if any, and to the insurance coverage, the management believes that
the disposition of those suits will not result in charges against assets or
earning materially in excess of amounts previously provided in the accounts.





                                       31
<PAGE>




ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



           (a)      Date of Meeting. The Annual Meeting of Stockholders
                    of Foster Wheeler Corporation was held on April 23,
                    2001, at the Hunterdon Hills Playhouse, 88 Route 173
                    West, Hampton, New Jersey.

           (b)      Election of Directors - Voting Results

                    Directors Elected

                    Eugene D. Atkinson
                        37,409,927                  For
                           443,253                  Voted to Withhold Authority

                    E. James Ferland
                        37,404,863                  For
                           448,317                  Voted to Withhold Authority

                    Joseph J. Melone
                        37,405,606                  For
                           447,574                  Voted to Withhold Authority

                    Richard J. Swift
                        37,357,048                  For
                           496,132                  Voted to Withhold Authority

                    Other Directors continuing in office:

                    Louis E. Azzato                        Martha Clark Goss
                    John P. Clancey                        Constance J. Horner
                    David J. Farris                        John E. Stuart

           (c)      Additional Matters Voted Upon. To approve the
                    proposed Reorganization and Agreement and Plan of
                    Merger among Foster Wheeler Corporation, Foster
                    Wheeler LLC and Foster Wheeler Ltd. whereby Foster
                    Wheeler Corporation will effectively change its
                    domicile from New York to Bermuda, with all shares of
                    Foster Wheeler Corporation automatically converting
                    into shares of Foster Wheeler Ltd.

                                27,633,695               For
                                   914,066               Against
                                   131,084               Abstain
                                 9,174,335               Broker non-votes

                    Ratification of the appointment of
                    PricewaterhouseCoopers LLP as Independent Accounts of
                    the Corporation for 2001.


                                37,543,835               For
                                   214,440               Against
                                    94,905               Abstain
                                         0               Broker non-votes


                                32
<PAGE>

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

           (a)               EXHIBITS

EXHIBIT
NUMBER                          EXHIBIT

     4.1  First Amendment dated March 1, 2001 to the Amended and Restated Rights
          Agreement dated September 30, 1997, between Foster Wheeler Corporation
          and Mellon Investor Services L.L.C. (f/n/a ChaseMellon Shareholders
          Services, L.L.C.), as rights agent.

     10.1 Change of Control Agreement entered into by the Corporation with the
          following Executive Officers: H.E. Bartoli, J.C. Blythe, L. Fries
          Gardner, R.D. Iseman, T.R. O'Brien, G.A. Renaud and J.E. Schessler
          dated March 1, 2001.

     10.2 Amendment to amended and restated Revolving Credit Agreement and
          Consent among the Corporation, the Guarantors signatory thereto, the
          Lenders Signatory thereto, and the Agents and Arrangers signatory
          thereto, dated as of May 31, 2000.

     12.1 Statement of Computation of Consolidated Ratio of Earnings to Fixed
          Charges and Combined Fixed


                  (b)               REPORTS ON FORM 8-K

     On April 2, 2001 the Corporation announced the Retirement and Consulting
          Agreement entered into by its Chairman, President and C.E.O.

                (Filed as exhibits 99.1 and 10.1, respectively,
                     to this Form 8-K dated April 2, 2001)




                                       33
<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:  MAY 14, 2001                            /S/ RICHARD J. SWIFT
      ----------------                        ----------------------------------
                                              Richard J. Swift
                                              (Chairman, President and
                                                    Chief Executive Officer)





Date:  MAY 14, 2001                            /S/ GILLES A. RENAUD
      ----------------                        ----------------------------------
                                              Gilles A. Renaud
                                              (Senior Vice President and
                                                    Chief Financial Officer)





                                       34
<PAGE>