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

                                   FORM 10-Q


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

                 FOR THE QUARTERLY PERIOD ENDED JUNE 26, 1998

                                      OR

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


               FOR THE TRANSITION PERIOD FROM _______ TO _______


                        COMMISSION FILE NUMBER 1-286-2


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


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


      Perryville Corporate Park, Clinton, N. J.         08809-4000
      (Address of principal executive offices)          (Zip Code)


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

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of the  latest  practicable  date:  40,736,864  shares of the
Corporation's  common  stock ($1.00 par value) were  outstanding  as of June 26,
1998.





<PAGE>


                     FOSTER WHEELER CORPORATION


                                INDEX



Part I   Financial Information:


      Item 1 - Financial Statements:

           Condensed Consolidated Balance Sheet at June 26, 1998 and
              December 26, 1997

           Condensed Consolidated Statement of Earnings and
              Comprehensive Income Three and Six Months Ended June 26, 1998
              and June 27, 1997

            Condensed Consolidated Statement of Cash Flows
              Six Months Ended June 26, 1998 and June 27, 1997

              Notes to Condensed Consolidated Financial Statements


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

Part II  Other Information:

      Item 1 - Legal Proceedings

      Item 6 - Exhibits and Reports on Form 8-K

Signatures



<PAGE>

<TABLE>
<CAPTION>


PART I    FINANCIAL INFORMATION
ITEM 1 -  FINANCIAL STATEMENTS

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


                                                                       June 26, 1998             December 26,
ASSETS                                                                   (Unaudited)                  1997
<S>                                                                        <C>                    <C>   
Current Assets:
     Cash and cash equivalents                                             $   144,382            $   167,417
     Short-term investments                                                     69,764                 91,888
     Accounts and notes receivable                                             785,129                799,375
     Contracts in process and inventories                                      478,130                415,186
     Prepaid and refundable income taxes                                        49,000                 46,175
     Prepaid expenses                                                           27,765                 25,230
                                                                          ------------            -----------
          Total Current Assets                                               1,554,170              1,545,271
                                                                            ----------             ----------
Land, buildings and equipment                                                1,180,018              1,138,098
Less accumulated depreciation                                                  324,798                313,646
                                                                           -----------            -----------
         Net book value                                                        855,220                824,452
                                                                           -----------            -----------

Notes and accounts receivable - long-term                                       90,099                 86,353
Investments and advances                                                       134,773                127,629
Intangible assets - net                                                        294,419                298,217
Prepaid pension costs and benefits                                             176,362                187,200
Other, including insurance recoveries                                          286,726                275,582
Deferred income taxes                                                           16,122                 21,659
                                                                           -----------            -----------

         Total Assets                                                       $3,407,891             $3,366,363
                                                                            ==========             ==========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Current installments on long-term debt                                $    34,415            $    33,528
     Bank loans                                                                 81,000                 53,748
     Accounts payable and accrued expenses                                     629,189                626,160
     Estimated costs to complete long-term contracts                           518,463                603,224
     Advance payments by customers                                             107,804                 98,865
     Income taxes                                                               32,685                 21,527
                                                                           -----------            -----------
         Total Current Liabilities                                           1,403,556              1,437,052
Special-purpose project debt                                                   429,012                432,772
Other long-term debt                                                           499,257                422,896
Postretirement and other employee benefits
     other than pensions                                                       166,083                169,212
Other long-term liabilities, deferred credits and
     minority interest in subsidiary companies                                 251,064                250,853
Deferred income taxes                                                           34,683                 34,148
                                                                          ------------           ------------

         Total Liabilities                                                   2,783,655              2,746,933
                                                                            ==========             ==========
Stockholders' Equity:

     Common stock                                                               40,748                 40,746
     Paid-in capital                                                           201,154                201,105
     Retained earnings                                                         447,384                426,761
     Accumulated other comprehensive income                                    (64,755)               (48,887)
                                                                          -------------          -------------
                                                                               624,531                619,725

     Less cost of treasury stock                                                  (295)                  (295)
                                                                        ---------------        ---------------
         Total Stockholders' Equity                                            624,236                619,430
                                                                          ------------            -----------
         Total Liabilities and Stockholders' Equity                         $3,407,891             $3,366,363
                                                                            ==========             ==========


See notes to financial statements.
</TABLE>

                                                                                


<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                   Six Months Ended
                                    June 26, 1998   June 27, 1997(a)    June 26, 1998     June 27, 1997(a)
<S>                                  <C>               <C>               <C>                 <C>           
Revenues:
     Operating revenues               $ 1,033,825      $ 1,030,634        $ 2,061,786         $ 1,995,748
     Other income                          20,329           66,487             30,122              79,853
                                    -------------    -------------      -------------      --------------

     Total revenues                     1,054,154        1,097,121          2,091,908           2,075,601
                                      -----------      -----------        -----------         -----------

Cost and expenses:
     Cost of operating revenues           938,146          999,686          1,873,671           1,854,201
     Selling, general and adminis-
        trative expenses                   60,485           73,067            116,899             143,984
     Other deductions/minority
        interest                           22,455           27,841             40,737              47,527
                                    -------------    -------------      -------------       -------------

     Total costs and expenses           1,021,086        1,100,594          2,031,307           2,045,712
                                      -----------      -----------        -----------         -----------

Earnings/(loss) before income taxes        33,068           (3,473)            60,601              29,889
Provision for income taxes                 12,730              158             22,877              13,298
                                     ------------   --------------       ------------        ------------

Net earnings/(loss)                        20,338           (3,631)            37,724              16,591
Other comprehensive income:
     Foreign currency translation
       adjustment                          (8,076)           1,859            (15,868)            (22,768)
                                      ------------      ----------       -------------        ------------


Comprehensive income/(loss)           $    12,262       $   (1,772)       $    21,856         $    (6,177)
                                      ===========       ===========       ===========         ============


Earnings/(loss) per share:

     Basic                             $ .50             $(.09)             $ .93              $ .41
                                       =====             ======             =====              =====
     Diluted:                          $ .50             $(.09)             $ .93              $ .41
                                       =====             ======             =====              =====


Shares outstanding:
     Basic:
     Weighted average number of
       shares outstanding              40,736,754       40,643,171         40,735,809          40,642,341
     Diluted:
     Effect of stock options                7,463                *              7,300             136,681
                                     ------------  ---------------      -------------        ------------

     Total diluted                     40,744,217       40,643,171         40,743,109          40,779,022
                                      ===========      ===========        ===========         ===========

Cash dividends paid per
     common share                     $  .21            $  .21             $  .42             $ .415
                                      ======            ======             ======             ======
</TABLE>


(a)  In the second  quarter of 1997, the  Corporation  recorded a pretax gain of
     $56.4 million ($36.6 million after tax) in other income related to the sale
     of Glitsch  International,  Inc.'s  assets.  Also, in the second quarter of
     1997 the  Corporation  recorded  provisions  reflected in cost of operating
     revenues  of $60.0  million  ($39.0  million  after tax)  against the Power
     Systems Group with respect to the Robbins  Resource  Recovery  Facility and
     $32.0 million ($20.8 million after tax) against the Energy  Equipment Group
     for reorganization costs. A charge of $6.5 million ($4.2 million after tax)
     for the  write-down  of  long-lived  assets  was  also  included  in  other
     deductions.
*    The effect of the stock  options  was not  included in the  calculation  of
     diluted  earnings per share as these options were  antidilutive  due to the
     quarter loss in 1997.
See notes to financial statements.
                                                                                

<PAGE>

<TABLE>
<CAPTION>


                                 FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                        (In Thousands of Dollars)
                                               (Unaudited)
                                                                                                 Six Months Ended
                                                                                       June 26, 1998       June 27, 1997
<S>                                                                                    <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net earnings                                                                      $   37,724            $   16,591
     Adjustments to reconcile net earnings
         to cash flows from operating activities:
         Depreciation and amortization                                                     29,746                31,085
         Noncurrent deferred tax                                                            5,876               (21,031)
         Net gain on sale of subsidiary                                                     -                   (49,900)
         Equity earnings, net of dividends                                                 (3,283)                 (689)
         Other                                                                             (3,682)               (2,624)
     Changes in assets  and  liabilities,  net of effects  of  
         acquisitions  and divestitures:
         Receivables                                                                       35,291              (166,719)
         Contracts in process and inventories                                             (65,437)              (19,724)
         Accounts payable and accrued expenses                                            (30,562)               39,560
         Estimated costs to complete long-term contracts                                  (82,734)              123,665
         Advance payments by customers                                                      9,305                23,119
         Income taxes                                                                       8,018               (26,295)
         Other assets and liabilities                                                        (910)              (33,119)
                                                                                       -----------            ----------
         NET CASH USED BY OPERATING ACTIVITIES                                            (60,648)              (86,081)
                                                                                        ----------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                                 (58,404)              (70,278)
     Proceeds from sale of subsidiary                                                        -                  195,283
     Proceeds from sale of properties                                                       2,225                 1,914
     Increase in investments and advances                                                  (5,201)              (46,394)
     Decrease in short-term investments                                                    21,351                45,826
     Partnership distributions                                                             (4,256)               (4,800)
                                                                                      ------------          ------------
         NET CASH (USED)/PROVIDED BY INVESTING ACTIVITIES                                 (44,285)              121,551
                                                                                       -----------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Dividends to stockholders                                                            (17,101)              (16,859)
     Proceeds from the exercise of stock options                                               51                   152
     Increase in short-term debt                                                           28,337                   316
     Proceeds from long-term debt                                                          83,288                64,915
     Repayment of long-term debt                                                           (9,403)              (67,946)
                                                                                      ------------          ------------
         NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES                                  85,172               (19,422)

     Effect of exchange rate changes on cash and cash equivalents                          (3,274)              (14,930)
                                                                                      ------------          ------------

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                                          (23,035)                1,118
Cash and cash equivalents at beginning of year                                            167,417               267,149
                                                                                       ----------            ----------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $  144,382            $  268,267
                                                                                       ==========            ==========


Cash paid during period:
     Interest (net of amount capitalized)                                             $    20,783            $   21,307
     Income taxes                                                                     $    10,740            $   11,729

See notes to financial statements.
                                                                                
</TABLE>


<PAGE>





                FOSTER WHEELER CORPORATION AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              (In Thousands of Dollars, Except Per Share Amounts)
                               (Unaudited)

1.       The condensed  consolidated  balance sheet as of June 26, 1998, and the
         related condensed consolidated statements of earnings and comprehensive
         income  and cash flows for the three and six month  periods  ended June
         26, 1998 and June 27, 1997 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
         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  26,  1997  filed  with  the  Securities  and  Exchange
         Commission on March 19, 1998. The Condensed  Consolidated Balance Sheet
         as of December 26, 1997 has been derived from the audited  Consolidated
         Balance  Sheet  included  in the 1997 Annual  Report.  A summary of the
         Corporation's  significant accounting policies is presented on pages 36
         and 37 (not shown) of its 1997 Annual Report to Stockholders.  Users of
         financial  information  produced for interim  periods are encouraged to
         refer to the footnotes  contained in the Annual Report to  Stockholders
         when reviewing  interim financial  results.  There has been no material
         change in the accounting  policies followed by the company during 1998,
         except as described in Note 7 of these Condensed Consolidated Financial
         Statements.

         In conformity with generally accepted accounting principles, management
         must 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 the reported
         amounts of revenues and expense  during the  reporting  period.  Actual
         results could differ from those estimates.

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

         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 1970's and prior. As
         of June 26, 1998, there were  approximately  63,000 claims pending.  In
         1998,  approximately  12,000  new claims  were filed and  approximately
         14,000  were  either  settled  or  dismissed   without   payment.   The
         Corporation   has   agreements   with   insurance   carriers   covering
         significantly  more than a majority of the potential  costs relating to
         these exposures. The Corporation has recorded, with respect to asbestos
         litigation,  an asset relating to the probable insurance recoveries and
         a liability  relating to probable losses.  These assets and liabilities
         were estimated based on historical  data developed in conjunction  with
         outside experts. Management of the Corporation has carefully considered
         the financial viability and legal obligations of its insurance carriers
         and has  concluded  that except for those  insurers that have become or
         may become  insolvent,  the insurers will  continue to adequately  fund
         claims and defense costs relating to asbestos litigation.

         In 1996, the Corporation  completed the construction of a recycling and
         waste-to-energy  project  (the  "Robbins  Project")  for the Village of
         Robbins,  Illinois.  A subsidiary of the Corporation,  Robbins Resource
         Recovery Limited Partnership (the "Partnership") operates this facility
         under a long-term operating lease. By virtue of the facility qualifying
         under  the  Illinois  Retail  Rate Law  (the  "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 was to be  reimbursed  by the  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 this  facility.  Also,  the State  adopted the
         Illinois  Electric  Service Customer Choice and Rate Relief Law of 1997
         which creates  additional  uncertainty  relating to the availability of
         tax  credits  under the Retail  Rate Law.  This law  becomes  effective
         August  1,  1998.   The   Partnership   is   contesting   the  Illinois
         legislature's  partial repeal of the Retail Rate Law in Court, however,
         the relief sought is prospective  only, and the Corporation will not be
         entitled to any recovery of lost revenue.  In the event this litigation
         is not successful and no other means are available to generate  revenue
         from  the  sale of  electric  power  above  that  provided  by  selling
         electricity at the "avoided  cost," there may be a significant  adverse
         financial impact on the operating  results of the Robbins Project.  The
         Corporation  established a reserve of $60,000 in the second  quarter of
         1997,  which  was  considered   sufficient  to  cover  the  anticipated
         operating losses until the year 1999, reflecting the time period within
         which the  Corporation  expected the courts to provide  relief from the
         partial repeal of the Retail Rate Law. The  calculation of this reserve
         was based on a number of operating  assumptions  impacting both revenue
         and costs.  It is now expected that the reserve will be fully  utilized
         during the fourth quarter of 1998. As a result of modifications,  it is
         expected that plant  availability in 1999 will increase  substantially.
         In accordance  with the  requirements  of FAS 121,  "Accounting for the
         Impairment of Long-Lived  Assets," the Corporation  continues to assess
         the long-term  profitability  of the Robbins  Project based on numerous
         operating scenarios.  This evaluation is not complete and, accordingly,
         any further adjustments that may be appropriate have not been reflected
         in its financial  statements.  However,  it is reasonably possible that
         the  evaluation  of the  assumptions  and  changes in future  plans may
         result in significant  additional  charges to earnings.  As of June 26,
         1998, the Corporation had financial  guarantees and consolidated assets
         related to the Robbins Project totaling approximately $175,000.

         In 1997, the United States Supreme Court  effectively  invalidated  New
         Jersey's   long-standing   municipal   solid   waste   flow  rules  and
         regulations.  The  immediate  effect was to  eliminate  the  guaranteed
         supply of municipal  solid waste to the Camden  County  Waste-to-Energy
         Project  (the  "Camden  Project")  with its  corresponding  tipping fee
         revenue. As a result,  tipping fees have been reduced to market rate in
         order  to  provide  a  steady  supply  of  fuel  to  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  Corporation  has
         filed suit against certain involved parties, including the State of New
         Jersey,  seeking among other things,  to void the applicable  contracts
         and agreements  governing the Camden Project.  Pending final outcome of
         the litigation and the results of legislative initiatives in New Jersey
         to resolve the issues relating to the debt obligations  associated with
         the Camden Project, management believes that the plant will continue to
         operate at full capacity while earning sufficient revenues to cover its
         fees as operator of the plant. However, at this time, management cannot
         determine the effect of the foregoing on the Camden Project.

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

3.       The  Corporation  maintains  two  revolving  credit  agreements  with a
         syndicate of banks.  One is a short-term  revolving credit agreement of
         $100,000  with a  maturity  of 364 days and the  second  is a  $300,000
         revolving credit agreement with a maturity of four years (collectively,
         the "Revolving Credit  Agreements").  These Revolving Credit Agreements
         require the maintenance of a maximum Consolidated  Leverage Ratio and a
         minimum Consolidated Fixed Charges Coverage Ratio. As of June 26, 1998,
         the Corporation was in compliance with both of these provisions. During
         the  second  quarter  of 1998,  the  Corporation  filed a  Registration
         Statement on Form S-3 relating to up to $300.0 million of debt,  equity
         and other securities.

4.       A total of 2,559,718  shares were reserved for issuance under the stock
         option plans; of this total 751,916 were not under option.

5.       Basic per share data has been  computed  based on the weighted  average
         number of shares of common  stock  outstanding.  Diluted per share data
         has been computed on the basic plus the dilution of stock options.

<PAGE>


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

<TABLE>
<CAPTION>

                                        Three Months Ended                                Six Months Ended

                                    June 26, 1998         June 27, 1997             June 26, 1998         June 27, 1997
                                    -------------         -------------             -------------         -------------
         <S>                              <C>                   <C>                       <C>                   <C>

         Interest income                  $ 5,368               $ 5,781                   $11,369               $11,167
                                          =======               =======                   =======               =======
         Interest cost                    $18,442               $17,944                   $35,311               $33,308
                                          =======               =======                   =======               =======

</TABLE>

         Included in interest cost is interest  capitalized on  self-constructed
         assets,  for the three and six months ended June 26, 1998 of $2,926 and
         $5,790, respectively,  compared to $2,885 and $4,726 for the comparable
         periods in 1997.

7.       In the first quarter of 1998, the Corporation adopted the provisions of
         Statements of Financial  Accounting  Standards No. 129,  "Disclosure of
         Information about Capital Structure," No. 130, "Reporting Comprehensive
         Income",  and No. 131,  "Disclosure about Segments of an Enterprise and
         Related Information." Where applicable, prior data has been restated to
         conform to the 1998 presentation.
                                                                                
         The  Financial  Accounting  Standards  Board  released  in  June  1998,
         Statement of Financial  Accounting  Standards No. 133,  "Accounting for
         Derivative  Instruments  and Hedging  Activities."  This  statement  is
         effective for all fiscal  quarters of all fiscal years  beginning after
         June 15, 1999.  This statement  addresses the accounting for derivative
         instruments including certain derivative  instruments embedded in other
         contracts  and for hedging  activities.  The  Corporation  is currently
         assessing the impact of adoption of this new Statement.

         In the  second  quarter  of 1998,  the  Accounting  Standard  Executive
         Committee of the AICPA issued Statement of Position 98-5, "Reporting on
         the Costs of Start-up  Activities." This statement provides guidance on
         financial  reporting of start-up costs and  organizational  costs. This
         Statement of Position is effective for financial  statements for fiscal
         years  beginning  after  December 15, 1998.  This Statement of Position
         requires start-up costs to be expensed as incurred.  The Corporation is
         currently  assessing the financial statement impact of adoption of this
         Statement of Position.

<PAGE>


8. Changes in equity for the six months ended June 26, 1998 were as follows:

<TABLE>
<CAPTION>


                                                                                  Accumulated     
                                                                                  Other                                 Total
                                Common Stock            Paid-in     Retained      Comprehensive    Treasury Stock       Stockholders
                             Shares       Amount        Capital     Earnings      Loss             Shares   Amount      Equity
                            ----------   --------       --------    --------      ---------------  -------- --------    ------------

<S>                         <C>         <C>            <C>         <C>              <C>            <C>       <C>          <C>       
Balance December 26, 1997   40,745,668  $   40,746     $ 201,105   $  426,761       $  (48,887)    (10,804)  $  (295)     $ 619,430

Net Earnings                                                           37,724                                               37,724

Dividends paid - common                                               (17,101)                                             (17,101)

Comprehensive loss                                                                     (15,868)                            (15,868)

Sold under stock options         2,000            2           49                                                                51
                            -----------  ----------    ----------   -----------     ------------   ---------  --------     ---------


Balance June 26, 1998       40,747,668   $   40,748     $201,154    $ 447,384        $ (64,755)      (10,804) $ (295)     $ 624,236
                            ==========   ==========     =========   =========        ==========      ======== ========    ==========
                                                                                         

</TABLE>

<PAGE>


9.      Major Business Groups

<TABLE>
<CAPTION>

FOR SIX MONTHS                                          Engineering                                             Corporate and
                                                              and             Energy              Power         Financial
                                          Total         Construction          Equipment           Systems       Service *
<S>                                     <C>                <C>                 <C>               <C>             <C>      
Ended
June 26, 1998
Revenues                                $2,091,908         $1,547,806          $  540,010        $   88,356      $  (84,264)
Interest Expense                            29,520              4,430               3,657            11,165          10,268
Earnings/(Loss) Before Income Taxes         60,601             48,030              22,407            10,934         (20,770)
Provision/(Benefit) for Income Taxes        22,877             17,507               8,251             4,399          (7,280)
                                        ----------      -------------        ------------       -----------      -----------


Net Earnings/(Loss)                     $   37,724       $     30,523         $    14,156        $    6,535     $   (13,490)
                                        ==========       ============         ===========        ==========     ============



                                                        Engineering                                             Corporate and
                                                              and             Energy              Power         Financial
                                          Total         Construction          Equipment           Systems       Service *
Ended
June 27, 1997
Revenues                                $2,075,601         $1,418,408          $  673,353        $   81,402      $  (97,562)
Interest Expense                            28,582              2,005               6,827            11,430           8,320
Earnings/(Loss) Before Income Taxes         29,889             53,256              55,530           (47,244)        (31,653)
Provision/(Benefit) for Income Taxes        13,298             20,713              18,918           (15,519)        (10,814)
                                        ----------         ----------          ----------         ----------     -----------


Net Earnings/(Loss)                     $   16,591         $   32,543          $   36,612        $  (31,725)     $  (20,839)
                                        ==========         ==========          ==========        ===========     ===========


*Includes intersegment eliminations

</TABLE>



<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                                   (Unaudited)

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 1997  Annual  Report on Form 10-K filed
March 19, 1998.

Results of Operations

<TABLE>
<CAPTION>

                                                                             CONSOLIDATED DATA
                                                                         (In Millions of Dollars)

                                            Three Months Ended                                 Six Months Ended
                                            ------------------                                 ----------------
                                    June 26, 1998         June 27, 1997             June 26, 1998         June 27, 1997
                                    -------------         -------------             -------------         -------------
         <S>                               <C>                   <C>                       <C>                   <C>

         Backlog                           $7,796.4              $7,437.0                  $7,796.4              $7,437.0
                                           ========              ========                  ========              ========
         New orders                        $1,369.7              $1,446.7                  $2,818.6              $2,667.4
                                           ========              ========                  ========              ========
         Revenues                          $1,054.2              $1,097.1                  $2,091.9              $2,075.6
                                           ========              ========                  ========              ========
         Net earnings                    $     20.3            $     (3.6)               $     37.7            $     16.6
                                         ==========            ===========               ==========            ==========


</TABLE>

The Corporation's  consolidated  backlog at June 26, 1998 totaled $7,796.4,  the
highest in the history of the Corporation,  which  represented an increase of 5%
over the  amount  as of June 27,  1997.  The  dollar  amount of  backlog  is not
necessarily  indicative of the future earnings of the Corporation related to the
performance of such work. The backlog of unfilled orders includes  amounts based
on signed  contracts as well as agreed  letters of intent which  management  has
determined are likely to be performed. Although backlog represents only business
which is considered firm,  cancellations or scope  adjustments may occur. Due to
factors outside the Corporation's control, such as changes in project schedules,
the  Corporation  cannot predict with certainty the portion of backlog not to be
performed. Backlog is adjusted to reflect project cancellations, deferrals, sale
of subsidiaries  and revised project scope and cost. This adjustment for the six
months ended June 26, 1998 was $146.5,  compared  with $116.5 for the six months
ended June 27, 1997.  Furthermore,  the  Corporation's  future  award  prospects
include several large-scale  international  projects and, because the large size
and  uncertain   timing  of  these  projects  can  create   variability  in  the
Corporation's contract awards, future award trends are difficult to predict.

New  orders  awarded  for the  three and six  months  ended  June 26,  1998 were
$1,369.7  and $2,818.6  respectively,  compared to $1,446.7 and $2,667.4 for the
periods ended June 27, 1997.  Approximately  65% of new orders booked in the six
months  ended  June 26,  1998 were for  projects  awarded  to the  Corporation's
subsidiaries   located  outside  the  United  States.   Key  geographic  regions
contributing  to new orders  awarded for the six months ended June 26, 1998 were
the United States, Singapore, Europe and the Middle East.

In the second quarter of 1997 the Corporation recorded provisions totaling $98.5
and a $56.4  pretax  gain on the sale of a  subsidiary.  The net amount of $42.1
($27.4 after tax or $.67 per share) included the following:

(a)    $60.0  provision  recorded  in cost of  operating  revenues  in the Power
       Systems Group with respect to the Robbins Resource Recovery Facility,
(b)    $32.0  provision  recorded  in cost of  operating  revenues in the Energy
       Equipment Group for the last phase of the Group's  reorganization started
       in 1995 following the Ahlstrom Pyropower acquisition,
(c)    $6.5  provision  included in other  deductions in Corporate and Financial
       Services for the write-downs of long-lived assets, and
(d)    $56.4 gain included in other income in the Energy Equipment Group for the
       sale of Glitsch International, Inc.'s assets

Operating  revenues  increased  slightly in the three months ended June 26, 1998
compared to the three months ended June 27, 1997 to $1,033.8 from $1,030.6.  The
most recent six month period reflects an increase in operating revenues of $66.0
from $1,995.8 in 1997 to $2,061.8 in 1998.  Included in 1997 operating  revenues
were  $143.4  for the  six-month  period and $81.7 for the  second  quarter  for
Glitsch International Inc., which was sold in June 1997.

Gross  earnings,  which  are  equal  to  operating  revenues  minus  the cost of
operating revenues,  increased by $46.6 in the six months ended June 26, 1998 as
compared  with the six months ended June 27, 1997 to $188.1 from  $141.5.  Gross
earnings  increased by $64.7 in the three months ended June 26, 1998 as compared
with the three months ended June 27, 1997 to $95.7 from $31.0.  These  increases
were  primarily  the result of the negative  impact of  provisions  taken in the
second quarter of 1997, which were discussed  above,  offset by the reduction in
gross earnings in 1998 due to the sale of Glitsch International, Inc.

Selling,  general and administrative expenses decreased by 19% in the six months
ended June 26,  1998 as compared  with the same  period in 1997,  from $144.0 to
$116.9.  Selling,  general and  administrative  expenses decreased by 17% in the
three months ended June 26, 1998 as compared with the same period in 1997,  from
$73.1 to $60.5.  Both the three and six month decreases are primarily due to the
sale of Glitsch International, Inc. in June 1997.

Other  income in the six months  ended June 26, 1998 as  compared  with June 27,
1997 decreased to $30.1 from $79.9.  Other income in the three months ended June
26,  1998 as  compared  with  June  27,  1997  decreased  to $20.3  from  $66.5.
Approximately  $56.4 of the differences for both the three and six month period,
was due to the  gain  recorded  on the  sale of  Glitsch  International,  Inc.'s
assets.

Other deductions in the six months ended June 26, 1998, of $40.0, were 11% lower
than that  reported in the six months ended June 27, 1997  primarily  due to the
$6.5  write-off of  long-lived  assets in the second  quarter of 1998.  This was
partially  offset by an  increase  in interest  expense of  approximately  $1.0.
Interest  expense for the quarter ended June 26, 1998  increased by $.5 compared
to the second quarter of 1997.

The  effective  tax rate of 38.5% and 37.8% for the three and six  months  ended
June 26, 1998,  respectively,  exceed the U.S.  statutory  rate primarily due to
state taxes and the impact of foreign source earnings.

Net  earnings  for the six  months  ended  June 26,  1998 were $37.7 or $.93 per
share-basic  compared  to $16.6 for the six  months  ended  June 27,  1997.  Net
earnings  for the  three  months  ended  June 26,  1998  were  $20.3 or $.50 per
share-basic compared to a loss of $3.6 for the three months ended June 27, 1997.


<PAGE>

<TABLE>
<CAPTION>

                                                                    ENGINEERING AND CONSTRUCTION GROUP
                                                                         (In Millions of Dollars)

                                            Three Months Ended                                 Six Months Ended
                                            ------------------                                 ----------------
                                    June 26, 1998         June 27, 1997             June 26, 1998         June 27, 1997
                                    -------------         -------------             -------------         -------------

         <S>                               <C>                  <C>                        <C>                   <C>
         Backlog                           $6,108.2              $5,333.5                  $6,108.2              $5,333.5
                                           ========              ========                  ========              ========
         New orders                        $1,148.3             $   915.3                  $2,408.0              $1,767.2
                                           ========             =========                  ========              ========
         Operating Revenues               $   723.5             $   732.7                  $1,530.2              $1,404.8
                                          =========             =========                  ========              ========

         Gross earnings from
              operations                      $50.7                 $59.6                   $ 103.9                $115.4
                                              =====                 =====                   =======                ======
</TABLE>



The Engineering and  Construction  Group ("E&C Group"),  had a record backlog of
$6,108.2 at June 26, 1998,  which  represented a 15% increase from June 27, 1997
due primarily to orders  awarded to the  Continental  European and United States
subsidiaries.  Approximately  20% of the E&C Group's backlog as of June 26, 1998
was  based on awards  for  projects  in  Southeast  Asia.  The  majority  of the
Southeast  Asian backlog  represents  orders for export  oriented  projects from
national oil companies or multinational corporations.  New orders booked for the
three  and six month  periods  ended  June 26,  1998  increased  by 25% and 36%,
respectively,  compared  with the periods ended June 27, 1997.  These  increases
were  primarily the result of the  significant  orders taken by the  Continental
European and United States operating  subsidiaries.  Operating  revenues for the
three month period ended June 26, 1998 decreased  slightly compared to the three
month period ended June 27, 1997; while operating  revenues  increased by 9% for
the six month period in 1998  compared  with 1997.  The United States and United
Kingdom  subsidiaries  were primarily  responsible  for the six-month  increase.
Gross  earnings  from  operations  decreased  by 15% and 10% for the  three  and
six-month periods ended June 26, 1998,  respectively,  compared with the periods
ended June 27, 1997.  The gross earnings for the  three-month  period were lower
primarily  due to the  decrease  reported  by the  Environmental  ($4.0) and the
Continental  European  ($4.2)  subsidiaries.  The six-month  gross earnings were
lower primarily due to the decrease reported by the Environmental  subsidiary of
$11.1 and the Continental  European  decrease of $6.5. This was partially offset
by the increase in gross earnings  reported by the United Kingdom  subsidiary of
$8.0.


<PAGE>

<TABLE>
<CAPTION>


                                                                          ENERGY EQUIPMENT GROUP
                                                                         (In Millions of Dollars)

                                            Three Months Ended                                 Six Months Ended
                                            ------------------                                 ----------------
                                    June 26, 1998         June 27, 1997             June 26, 1998         June 27, 1997
                                    -------------         -------------             -------------         -------------

         <S>                              <C>                   <C>                       <C>                   <C>
         Backlog                           $1,451.9              $1,843.6                  $1,451.9              $1,843.6
                                           ========              ========                  ========              ========
         New orders                       $   202.4             $   497.1                 $   342.5             $   848.9
                                          =========             =========                 =========             =========
         Operating Revenues               $   294.6             $   332.6                 $   535.4             $   605.1
                                          =========             =========                 =========             =========

         Gross earnings from
              operations                      $31.9                 $15.7                     $61.2                 $58.4
                                              =====                 =====                     =====                 =====
</TABLE>



The Energy  Equipment  Group had a backlog of $1,451.9 at June 26,  1998,  which
represented  a 21%  decrease  from June 27, 1997 due  primarily  to lower orders
awarded to the North American subsidiaries and the result of the sale of Glitsch
International,  Inc.  in the second  quarter of 1997.  Approximately  50% of the
Energy  Equipment  Group's  backlog as of June 26, 1998  represents  orders from
China. These orders are for large utility size boilers, payments under which are
supported by  financing  agreements  guaranteed  by United  States,  European or
Japanese export credit  agencies.  New orders booked for the three and six-month
periods ended June 26, 1998 decreased by 59% and 60%, respectively.  The sale of
Glitsch International,  Inc. accounted for approximately $54.0 and $130.0 of the
three and six month  decreases.  Operating  revenues  for the three month period
ended  June  26,  1998   decreased   primarily   due  to  the  sale  of  Glitsch
International,  Inc. Gross earnings from operations  increased by $16.2 and $2.8
for the three and  six-month  periods  ended  June 26,  1998  compared  with the
periods ended June 27, 1997. The gross earnings for the three-month  period were
higher  primarily  due to the $32.0  provision  taken for  reorganization  costs
offset by the effect of selling Glitsch International, Inc. in 1997.

<TABLE>
<CAPTION>



                                                                            POWER SYSTEMS GROUP
                                                                         (In Millions of Dollars)

                                            Three Months Ended                                 Six Months Ended
                                            ------------------                                 ----------------
                                    June 26, 1998         June 27, 1997             June 26, 1998         June 27, 1997
                                    -------------         -------------             -------------         -------------

         <S>                               <C>                   <C>                       <C>                   <C>
         Backlog                           $  271.8              $  384.3                  $  271.8              $  384.3
                                           ========              ========                  ========              ========
         New orders                        $   33.6             $    37.5                 $    94.0             $    76.9
                                           ========             =========                 =========             =========
         Operating Revenues                $   36.8             $    37.5                 $    77.2             $    77.5
                                           ========             =========                 =========             =========

         Gross earnings/(loss)
             from operations                  $12.5                $(45.1)                    $21.8                $(33.6)
                                              =====                =======                    =====                =======

</TABLE>


The Power Systems Group's gross earnings from operations  improved primarily due
to the impact of the $60.0 provision taken in the second quarter of 1997 for the
Robbins  Resource  Recovery  Facility.  This  improvement  was  offset  by lower
revenues  at the Camden  Municipal  Solid  Waste  Facility of $1.7 for the three
months and $4.1 for the six months  primarily  due to  flow-control  legislation
introduced in 1997 (see Footnote 2).



<PAGE>


Financial Condition

The Corporation's  consolidated financial condition slightly improved during the
six months ended June 26, 1998 as compared to December  26, 1997.  Stockholders'
equity for the six months ended June 26, 1998 increased by $4.8 million,  due to
net earnings reduced by dividends and the accumulated translation adjustment.

During  the  six  months  ended  June  26,  1998,  the  Corporation's  long-term
investments in land, buildings and equipment were $58.4 million as compared with
$70.3 million for the comparable period in 1997. Approximately $22.7 million was
invested by the Power Systems Group in build,  own and operate  projects  during
the first six months of 1998.

Since December 26, 1997,  long-term debt,  including current  installments,  and
bank loans increased by $102.2 million.

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

Liquidity and Capital Resources

Cash and cash equivalents totaled $144.4 million at June 26, 1998, a decrease of
$23.0  million from fiscal year end 1997.  Short-term  investments  decreased by
$22.1  million  to $69.8  million.  During the six  months of fiscal  1998,  the
Corporation  paid  $17.1  million in  dividends  to  stockholders.  Cash used by
operating activities amounted to $60.6 million. The Power Systems Group invested
approximately $22.7 million in the construction of waste-to-energy, cogeneration
and hydrogen plants.

Over the last several years working  capital needs have increased as a result of
the Corporation  satisfying its customers'  requests for more favorable  payment
terms under contracts.  Such requests generally include reduced advance payments
and more favorable payment schedules.  Such terms, which require the Corporation
to defer receipt of payments from its customers,  have had a negative  impact on
the Corporation's  available working capital.  Management expects its customers'
requests  for more  favorable  payment  terms under the Energy  Equipment  Group
contracts  to  continue  as a result  of the  competitive  markets  in which the
Corporation operates.  The Corporation intends to satisfy its continuing working
capital  needs by  borrowing  under its  Revolving  Credit  Agreements,  through
internal cash generation and third-party  financings in the capital markets. The
Corporation's  pricing of contracts  recognizes costs associated with the use of
working capital.

Management of the Corporation  believes that cash and cash equivalents of $144.4
million and short-term  investments of $69.8 million at June 26, 1998,  combined
with cash flows from operating activities, amounts available under its Revolving
Credit  Agreements and access to third-party  financings in the capital  markets
will be  adequate  to meet its  working  capital  and  liquidity  needs  for the
foreseeable  future.  During the second quarter of 1998, the Corporation filed a
Registration  Statement  on Form S-3  relating to up to $300.0  million of debt,
equity and other securities.


<PAGE>

Other Matters

The  Corporation  and its  subsidiaries,  along with many other  companies,  are
codefendants in numerous lawsuits pending in the United States. Plaintiffs claim
damages for personal  injury  alleged to have arisen from  exposure to or use of
asbestos  in  connection   with  work  performed  by  the  Corporation  and  its
subsidiaries  during  the  1970's and  prior.  As of June 26,  1998,  there were
approximately  63,000 claims pending. In 1998,  approximately  12,000 new claims
were filed and  approximately  14,000 were either  settled or dismissed  without
payment.  The  Corporation  has  agreements  with  insurance  carriers  covering
significantly  more than a majority  of the  potential  costs  relating to these
exposures. The Corporation has recorded, with respect to asbestos litigation, an
asset relating to the probable insurance  recoveries and a liability relating to
probable losses. These assets and liabilities were estimated based on historical
data  developed  in  conjunction  with  outside   experts.   Management  of  the
Corporation  has  carefully   considered  the  financial   viability  and  legal
obligations  of its insurance  carriers and has concluded  that except for those
insurers that have become or may become insolvent, the insurers will continue to
adequately fund claims and defense costs relating to asbestos litigation.

In  1996,  the  Corporation  completed  the  construction  of  a  recycling  and
waste-to-energy  project  (the  "Robbins  Project")  for the Village of Robbins,
Illinois.  A subsidiary of the Corporation,  Robbins  Resource  Recovery Limited
Partnership  (the  "Partnership"),  operates  this  facility  under a  long-term
operating lease. By virtue of the facility  qualifying under the Illinois Retail
Rate Law (the "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 was to be  reimbursed  by the 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
this facility.  Also, the State adopted the Illinois  Electric  Service Customer
Choice and Rate Relief Law of 1997 which creates additional uncertainty relating
to the  availability  of tax credits under the Retail Rate Law. This law becomes
effective   August  1,  1998.   The   Partnership  is  contesting  the  Illinois
legislature's  partial  repeal of the  Retail  Rate Law in Court,  however,  the
relief sought is prospective  only, and the Corporation  will not be entitled to
any recovery of lost revenue. In the event this litigation is not successful and
no other means are available to generate revenue from the sale of electric power
above that provided by selling electricity at the "avoided cost," there may be a
significant  adverse  financial  impact on the operating  results of the Robbins
Project.  The  Corporation  established a reserve of $60.0 million in the second
quarter  of 1997,  which was  considered  sufficient  to cover  the  anticipated
operating  losses until the year 1999,  reflecting  the time period within which
the Corporation expected the courts to provide relief from the partial repeal of
the Retail Rate Law.  The  calculation  of this reserve was based on a number of
operating  assumptions impacting both revenue and costs. It is now expected that
the  reserve  will be fully  utilized  during the fourth  quarter of 1998.  As a
result of  modifications,  it is expected that plant  availability  in 1999 will
increase  substantially.  In  accordance  with  the  requirements  of  FAS  121,
"Accounting for the Impairment of Long-Lived Assets," the Corporation  continues
to assess the long-term  profitability  of the Robbins Project based on numerous
operating  scenarios.  This  evaluation  is not complete and,  accordingly,  any
further  adjustments  that may be  appropriate  have not been  reflected  in its
financial statements.  However, it is reasonably possible that the evaluation of
the assumptions and changes in future plans may result in significant additional
charges  to  earnings.  As of June  26,  1998,  the  Corporation  had  financial
guarantees  and  consolidated  assets  related to the Robbins  Project  totaling
approximately $175.0 million.

In 1997, the United States Supreme Court  effectively  invalidated  New Jersey's
long-standing  municipal solid waste flow rules and  regulations.  The immediate
effect was to eliminate the  guaranteed  supply of municipal  solid waste to the
Camden  County   Waste-to-Energy   Project  (the  "Camden   Project")  with  its
corresponding  tipping fee revenue. As a result,  tipping fees have been reduced
to market rate in order to provide a steady  supply of fuel to 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 Corporation has filed suit against certain
involved parties, including the State of New Jersey, seeking among other things,
to void the applicable  contracts and agreements  governing the Camden  Project.
Pending  final  outcome  of  the  litigation  and  the  results  of  legislative
initiatives in New Jersey to resolve the issues relating to the debt obligations
associated  with the Camden  Project,  management  believes  that the plant will
continue to operate at full capacity while earning sufficient  revenues to cover
its fees as  operator of the plant.  However,  at this time,  management  cannot
determine the effect of the foregoing on the Camden Project.

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

Safe Harbor Statement

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  and  other  sections  of  the  Form  10-Q  contain   forward-looking
statements  that  are  based  on  Management's  assumptions,   expectations  and
projections about the various industries within which the Corporation  operates.
Such  forward-looking  statements  by their nature  involve a degree of risk and
uncertainty.  The Corporation cautions that a variety of factors,  including but
not limited to the  following,  could cause  business  conditions and results to
differ materially from what is contained in forward-looking statements:  changes
in  the  rate  of  economic   growth  in  the  United  States  and  other  major
international  economies,  changes  in  investment  by  the  energy,  power  and
environmental industries, changes in regulatory environment,  changes in project
schedules,  changes in trade,  monetary and fiscal policies worldwide,  currency
fluctuations, outcomes of pending and future litigation, protection and validity
of patents and other intellectual property rights and increasing  competition by
foreign and domestic companies.



<PAGE>


PART II   OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS

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

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

As of June 10, 1998, the Corporation had been notified that it was a potentially
responsible  party  ("PRP")  under  CERCLA or similar  states  laws at three (3)
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 the  attributable to all
other PRPs is low.  The  Corporation  does not believe that its share of cleanup
obligations at any of the three off-site  facilities as to which it has received
a notice of potential liability will individually exceed $1.0 million.

The  Corporation   received  an   Administrative   Order  and  Notice  of  Civil
Administrative  Penalty Assessment (the  "Administrative  Order") dated April 1,
1997 alleging  state air act  violations  at the Camden  County Energy  Recovery
Associates  facility in New Jersey. The Administrative  Order seeks a penalty of
$32,000 and revocation of the Certificate to Operate. The Corporation  requested
an administrative  hearing to challenge the Administrative  Order, which request
automatically   stayed  any  permit  revocation.   The  Corporation  expects  an
additional penalty demand to increase to more than $100,000 as a result of other
violations  which the Corporation  expects the state to allege.  The Corporation
believes  that it will be able to address all issues of concern to the state and
that the resulting civil penalty will not be material to the Corporation.

The Corporation received a Complaint for Injunction and Civil Penalties from the
State  of  Illinois  date  April  28,  1998  alleging  primarily  state  air act
violations at the Robbins  Resource  Recovery  facility  (People of the State of
Illinois v. Foster  Wheeler  Robbins,  Inc.,  filed in the Circuit Court of Cook
County, Illinois, County Department,  Chancery Division). Although the complaint
seeks substantial  civil penalties for numerous  violations of up to $50,000 for
each  violation,  with an  additional  penalty of  $10,000  for each day of each
violation,  the maximum  allowed under the statute,  and an  injunction  against
continuing  violations,  the  Corporation  has  submitted  a plan  to the  state
designed to correct all violations  and expects that the resulting  penalty will
not be material to the Corporation.

<PAGE>


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

    (a)          Exhibits

                 Exhibit
                 Number                Exhibit

                  10       Form of Change in Control  Agreement  entered into by
                           the Corporation and the following executive officers:

                                                    N. W. Atwater
                                                    H. E. Bartoli
                                                    J. Blythe
                                                    C. Ferrari
                                                    L. Fries Gardner
                                                    R. D. Iseman
                                                    T. R. O'Brien
                                                    D. J. Roberts
                                                    J. E. Schessler
                                                    R. J. Swift
                                                    G. S. White

                  12-1     Statement of  Computation  of  Consolidated  Ratio of
                           Earnings to Fixed Charges and Combined  Fixed Charges
                           and Preferred Share Dividend Requirements

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

    (b)          Reports on Form 8-K
                 None



<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:   July 30, 1998                               /s/ Richard J. Swift
       -------------------------------------        --------------------
                                                    Richard J. Swift
                                                    Chairman, President and
                                                    Chief Executive Officer


Date:  July 30, 1998                               /s/ David J. Roberts
      --------------------------------------       --------------------
                                                   David J. Roberts
                                                   Vice Chairman and
                                                   Chief Financial Officer