<PAGE>   1
                                    FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549




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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 26, 1997

                                       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

                                (Not Applicable)
   Former name, former address and former fiscal year, if changed since last
                                    report.

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 September 26, 1997 was 40,731,864 shares.
<PAGE>   2
                           FOSTER WHEELER CORPORATION


                                      INDEX



<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------
<S>                                                                     <C>
Part I  Financial Information:


        Item 1 - Financial Statements:

              Condensed Consolidated Balance Sheet at
                 September 26, 1997 and December 27, 1996                     2

              Condensed Consolidated Statement of Earnings
                 Three and Nine Months Ended September 26, 1997 and
                 September 27, 1996                                           3

              Condensed Consolidated Statement of Cash Flows
                 Nine Months Ended September 26, 1997 and
                 September 27, 1996                                           4

              Notes to Condensed Consolidated Financial
                 Statements                                               5 - 7


        Item 2 - Management's Discussion and Analysis of
                 Financial Condition and Results of Operations           8 - 12

Part II Other Information:


        Item 6 - Exhibits and Reports on Form 8-K                            13
</TABLE>




                                      - 1 -
<PAGE>   3
ITEM 1. -  FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
ASSETS                                                 September 26, 1997      December 27,
                                                          (Unaudited)              1996
------                                                 ------------------      ------------
<S>                                                    <C>                     <C>
Current Assets:
   Cash and cash equivalents                              $   142,412          $   267,149
   Short-term investments                                     113,892              137,180
   Accounts and notes receivable                              860,700              885,785
   Contracts in process                                       317,664              363,716
   Inventories                                                  8,360               39,799
   Prepaid and refundable income taxes                         32,145               38,627
   Prepaid expenses                                            46,310               30,192
                                                          -----------          -----------
       Total Current Assets                                 1,521,483            1,762,448
                                                          -----------          -----------
Land, buildings and equipment                               1,092,443            1,054,786
Less accumulated depreciation                                 303,541              330,007
                                                          -----------          -----------
      Net book value                                          788,902              724,779
                                                          -----------          -----------

Notes and accounts receivable - long-term                      86,338               74,296
Investments and advances                                      125,257               73,725
Intangible assets - net                                       301,534              331,463
Prepaid pension costs and benefits                            172,098              180,473
Other, including insurance recoveries                         406,856              359,362
Deferred income taxes                                           6,910                3,788
                                                          -----------          -----------
       Total Assets                                       $ 3,409,378          $ 3,510,334
                                                          ===========          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current installments on long-term debt                 $    33,296          $    32,764
   Bank loans                                                  54,982               52,278
   Accounts payable and accrued expenses                      590,945              635,030
   Estimated cost to complete long-term contracts             696,510              562,984
   Advance payments by customers                               80,922              116,903
   Income taxes                                                (2,765)              41,935
                                                          -----------          -----------
       Total Current Liabilities                            1,453,890            1,441,894
Other long-term debt                                          343,819              416,995
Special-purpose project debt                                  436,122              379,284
Postretirement and other employee benefits
      other than pensions                                     160,137              180,210
Other long-term liabilities, deferred credits and
   minority interest in subsidiary companies                  362,119              372,898
Deferred income taxes                                          27,508               30,095
                                                          -----------          -----------
       Total Liabilities                                    2,783,595            2,821,376
                                                          -----------          -----------
Stockholders' Equity:
   Common stock                                                40,743               40,651
   Paid-in capital                                            201,010              197,970
   Retained earnings                                          433,018              471,177
   Accumulated translation adjustment                         (48,693)             (20,545)
                                                          -----------          -----------
                                                              626,078              689,253
   Less cost of treasury stock                                   (295)                (295)
                                                          -----------          -----------
       Total Stockholders' Equity                             625,783              688,958
                                                          -----------          -----------
       Total Liabilities and Stockholders' Equity         $ 3,409,378          $ 3,510,334
                                                          ===========          ===========
</TABLE>

See notes to financial statements.




                                      - 2 -
<PAGE>   4
                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
               (In Thousands of Dollars, Except Per Share Amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                        Three Months Ended                        Nine Months Ended
                                             ----------------------------------------  ----------------------------------------

                                             September 26, 1997    September 27, 1996  September 26, 1997    September 27, 1996
                                             ------------------    ------------------  ------------------    ------------------
<S>                                          <C>                   <C>                 <C>                   <C>
Revenues:
  Operating revenues                            $  1,029,994          $   960,912         $  3,025,742          $ 2,775,363
  Other income                                        19,795                7,598               99,648               25,174
                                                ------------          -----------         ------------          -----------

      Total revenues                               1,049,789              968,510            3,125,390            2,800,537
                                                ------------          -----------         ------------          -----------
 Cost and expenses:
    Cost of operating revenues                     1,010,507              832,901            2,772,708            2,412,583
    Selling, general and administrative
       expenses                                       63,368               74,784              207,352              214,495
    Other deductions/Minority interest                17,186               20,683               58,213               58,913
    Special charges                                       --                   --               98,500                   --
                                                ------------          -----------         ------------          -----------

        Total costs and expenses                   1,091,061              928,368            3,136,773            2,685,991
                                                ------------          -----------         ------------          -----------

(Loss)/earnings before income taxes                  (41,272)              40,142              (11,383)             114,546

(Benefit)/provision for income taxes                 (11,924)              16,177                1,374               42,080
                                                ------------          -----------         ------------          -----------

Net (loss)/earnings                             $    (29,348)         $    23,965         $    (12,757)         $    72,466
                                                ============          ===========         ============          ===========

Weighted average number of common
 shares outstanding                               40,687,568           40,620,729           40,657,417           40,576,513
                                                ============          ===========         ============          ===========

(Loss)/earnings per share                       $       (.72)         $       .59         $       (.31)         $      1.79
                                                ============          ===========         ============          ===========

Cash dividends paid per common share            $        .21          $      .205         $       .625          $      .605
                                                ============          ===========         ============          ===========
</TABLE>

See notes to financial statements.




                                       -3-
<PAGE>   5
                   FOSTER WHEELER CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (Unaudited)




<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                             ------------------------------------------
                                                                             September 26, 1997      September 27, 1996
                                                                             ------------------      ------------------
<S>                                                                          <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss)/ earnings                                                           $ (12,757)              $  72,466
  Adjustments to reconcile net (loss)/earnings
    to cash flows from operating activities:
      Depreciation and amortization                                                 46,173                  45,985
      Noncurrent deferred tax                                                       (4,903)                  8,889
      Gain on sale of subsidiary                                                   (56,400)                     --
      Special charges                                                               98,500                      --
      Other                                                                        (17,849)                 (4,212)
      Changes in assets and liabilities, net of effects of divestitures:
          Receivables                                                             (109,555)                (40,870)
          Contracts in process and inventories                                      13,923                 (38,630)
          Accounts payable and accrued expenses                                    (34,589)                (28,474)
          Estimated cost to complete long-term contracts                           118,050                   5,957
          Advance payments by customers                                            (17,391)                 25,118
          Income taxes                                                             (46,566)                 14,512
          Other assets and liabilities                                             (80,344)                (15,714)
                                                                                 ---------               ---------
  NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES                                (103,708)                 45,027
                                                                                 ---------               ---------

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                          (135,794)                (92,261)
    Proceeds from sale of subsidiary                                               195,283                      --
    Proceeds from sale of properties                                                 5,038                   1,525
    Increase in investments and advances                                           (46,712)                 (5,567)
    Decrease/(increase) in short-term investments                                   14,099                 (23,876)
    Partnership distributions                                                       (4,800)                 (4,859)
                                                                                 ---------               ---------
    NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                                27,114                (125,038)
                                                                                 ---------               ---------

 CASH FLOWS FROM FINANCING ACTIVITIES:
   Dividends to stockholders                                                       (25,403)                (24,539)
   Proceeds from exercise of stock options                                           2,671                   3,545
   Increase in short-term debt                                                       7,229                   6,872
   Proceeds from long-term debt                                                     64,915                 149,677
   Repayment of long-term debt                                                     (77,311)                (22,467)
                                                                                 ---------               ---------
   NET CASH (USED)/ PROVIDED BY FINANCING ACTIVITIES                               (27,899)                113,088

 Effect of exchange rate changes on cash and cash equivalents                      (20,244)                     67
                                                                                 ---------               ---------

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                                  (124,737)                 33,144
 Cash and cash equivalents at beginning of year                                    267,149                 167,131
                                                                                 ---------               ---------

 CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $ 142,412               $ 200,275
                                                                                 =========               =========

 Cash paid during period:
  -Interest (net of amount capitalized)                                          $  22,681               $  23,155
  -Income taxes                                                                  $  20,161               $  11,710
</TABLE>

       See notes to financial statements.

                                      - 4-
<PAGE>   6
                   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 September 26, 1997, and the
   related condensed consolidated statements of earnings for the three and nine
   month periods ended September 26, 1997 and September 27, 1996 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
   27, 1996 filed with the Securities and Exchange Commission March 21, 1997,
   which should be read in conjunction with this report.

   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 second quarter of 1997 the Corporation recorded a special pretax
   charge of $98,500 and $56,400 pretax gain on the sale of a subsidiary. The
   net amount of $42,100 ($27,365 after tax or $.67 per share) included the
   following:

   (a) $60,000 against the Power Systems Group with respect to the Robbins
   Resource Recovery facility. A subsidiary of the Corporation, Robbins Resource
   Recovery Limited Partnership, operates this facility under a long-term
   operating lease. By virtue of this 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." The State has repealed the Retail Rate Law insofar
   as it applied to this facility. As the result of the failure of the bill
   introduced in the Illinois State Legislature, which would have reinstated the
   Retail Rate Law and a recent decision in State court regarding procedural
   matters, Management of the Corporation determined that a charge against
   current earnings was required. Management considers this charge to be
   sufficient to cover the anticipated losses until the end of 1999, reflecting
   the time period within which the Corporation expects the Courts to provide
   relief from the state government's repeal of the Illinois Retail Rate Law.
   This charge includes $23,000 for modifications to the nonboiler systems of
   the plant, the associated down time and lack of revenue during the
   implementation of the modifications. Approximately 65% of the $60 million is
   expected to have a cash flow impact in 1997; the balance will be expended
   over the following two years.

   (b) $32,000 against the Energy Equipment Group representing the last phase of
   the Group's reorganization started in 1995 following the Ahlstrom Pyropower
   acquisition. These actions will result in a further reduction in operating
   costs with a more efficient product execution capability. This plan includes
   $14,500 for the discontinuance of certain product lines including incremental
   costs on certain completed contracts. Approximately $9,200 of the charge
   relates to the consolidation of the San Diego operations with the Group's
   activities in New Jersey. The $9,200 includes approximately $5,200 for
   personnel costs including severance and related benefits. The balance
   ($4,000) represents write-downs of San Diego assets (primarily land and
   buildings) in accordance with SFAS No. 121 Accounting for the Impairment of
   Long-lived Assets and for Long-lived Assets to be Disposed of. These San
   Diego long-lived assets are now considered to be for sale and have been
   accounted for at their current market value less estimated cost to sell. The
   remaining balance of approximately $8,300 is primarily related to the
   write-down of a Canadian co-generation plant in accordance with SFAS No. 121.
   As a result of the current reorganization this co-generation plant is now
   considered to be for sale. The basis of this plant has been adjusted to its
   estimated fair market value less cost to sell. Approximately 70% of the
   Energy Equipment Groups charges mentioned above will have a cash impact. The
   expectation is that 50% of this cost will be paid out by year end and that
   the balance will be paid out during 1998.

   (c) $6,500 against Corporate and Financial Services Group as the result of
   the valuation of a subsidiary. This subsidiary (a manufacturer of Copper
   Extrusions) was not part of the Corporation's three core business groups, and
   was sold in the third quarter of 1997.

                                       -5-
<PAGE>   7
   (d) In addition the Corporation recorded a $56,400 pretax ($36,660 after tax)
   gain on the sale of Glitsch International, Inc.'s assets to Koch Engineering
   Company. This gain was included in other income in the second quarter. The
   Corporation received approximately $195,000 in cash for the majority of the
   assets of Glitsch International, Inc. plus approximately $50,000 in net
   assets to be realized. The remaining net assets of Glitsch International,
   Inc. have been valued at their current estimated realizable value which are
   not considered material to the overall operations of the Corporation. For
   segment reporting purposes, the earnings of Glitsch International, Inc. up to
   the closing date of June 27, 1997 were included in the operating results of
   the Corporation within the Energy Equipment Group.

3. 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 or its subsidiaries by customers alleging deficiencies in
   either equipment or plant construction. Based on its knowledge of the facts
   and circumstances relating to the Corporation's and its subsidiaries'
   liabilities, if any, and to their insurance coverage, Management of the
   Corporation believes that the disposition of suits will not result in charges
   against assets or earnings material 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 1970s and prior. As of December 27, 1996, there were
   approximately 92,600 claims pending. Approximately 25,400 new claims were
   filed in 1997 and approximately 34,700 claims were either settled or
   dismissed without payment (including approximately 22,000 claims dismissed by
   a Federal District Court without prejudice which are subject to being
   refiled). As a result, on September 26, 1997, there were approximately 83,300
   claims pending. Any settlement costs not covered by the Corporation's
   insurance carriers were immaterial. The Corporation has agreements with
   insurance carriers covering a substantial portion of the potential costs
   relating to these exposures. The Corporation has recorded, with respect to
   asbestos litigation, an asset relating to 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 for the Village of Robbins, Illinois. A subsidiary of
   the Corporation, Robbins Resource Recovery Limited Partnership (the
   "Partnership"), will operate this facility under a long-term operating lease.
   By virtue of the 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
   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
   has repealed the Retail Rate Law insofar as it applied to this facility. The
   Partnership is contesting the Illinois legislature's partial repeal of the
   Retail Rate Law in court. 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
   project.

4. 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 were amended on June 25, 1997
   and contain two financial covenants. The first covenant is that the
   Consolidated Fixed Charges Coverage Ratio (as defined in the Revolving Credit
   Agreements) shall be greater than (i) 1.15 for the period from June 25, 1997
   to and including December 26, 1997 (ii) 2.00 for the period from and
   including December 27, 1997 to and including June 26, 1998 and (iii) 2.50
   thereafter. The Consolidated Fixed Charges Coverage Ratio for the period
   ending September 26, 1997 was 1.16:1. The second covenant is that the
   Consolidated Leverage Ratio (as defined in the Revolving Credit Agreements)
   (i) shall not at any time prior to December 26, 1997 exceed 0.60 to 1.00,
   (ii) shall not at any time from December 27, 1997 to and including June 26,
   1998 exceed 0.55 to 1.00 and (iii) shall not at any time thereafter exceed
   0.50 to 1.00. As of September 26, 1997, the ratio was 0.44:1.

5. A total of 2,564,719 shares were reserved for issuance under the stock option
   plans; of this total 1,153,416 were not under option.



                                       -6-
<PAGE>   8
6. Foster Wheeler Corporation had a backlog of firm orders as of September 26,
   1997 of $7,222,572 as compared to a backlog as of September 27, 1996 of
   $6,915,541.

7. (Loss)/earnings per share data have been computed on the weighted average
   number of shares of common stock outstanding. Outstanding stock options have
   been disregarded because their effect on earnings per share would not be
   significant.

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


<TABLE>
<CAPTION>
                                Three Months Ended                               Nine Months Ended
                                ------------------                               -----------------

                    September 26, 1997      September 27, 1996      September 26, 1997        September 27, 1996
                    ------------------      ------------------      ------------------        ------------------
<S>                 <C>                     <C>                     <C>                       <C>
Interest income          $ 4,038                 $  5,266                $ 15,205                  $14,958
                         =======                 ========                ========                  =======

Interest cost            $16,106                  $14,335                $ 49,414                  $44,684
                         =======                  =======                ========                  =======
</TABLE>


Included in interest cost is interest capitalized on self-constructed assets,
for the three and nine months ended September 26, 1997 of $2,772 and $7,498,
respectively, compared to $562 and $4,297 for the comparable periods in 1996.




                                       -7-
<PAGE>   9
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 1996 Annual Report on Form 10-K filed
March 21, 1997.

RESULTS OF OPERATIONS

                                General Comments

In the third quarter of 1997 the Corporation reported a net loss of $29.3
million or $.72 per share compared with net earnings of $24.0 million or $.59
per share in 1996. The results for the third quarter of 1997 were negatively
impacted by the operating results of several locations. The Engineering and
Construction Group recorded provisions amounting to approximately $24.0 million
($17.4 million after tax) on several projects for which it is seeking recovery
of a significant portion from clients. The ultimate outcome of these claims as
to both timing and amount is uncertain. The Energy Equipment Group recorded
approximately $30.0 million ($19.5 million after tax) in provisions for
increased cost on three projects, which were initially bid and executed out of
the San Diego office. As previously announced in July 1997, this operation has
been closed and the execution of contracts transferred to the New Jersey
headquarters. Earnings of the Power Systems Group were below expectations,
primarily due to increased non-capitalizable development costs. The net loss for
the nine months ended September 26, 1997 of $12.8 million or $.31 per share
included the second quarter special pretax charge of $98.5 million and $56.4
million pretax gain on the sale of a subsidiary. The net amount of $42.1 million
($27.4 million after tax or $.67 per share) included the following:

    (a) $60 million against the Power Systems Group with respect to the Robbins
    Resource Recovery facility. A subsidiary of the Corporation, Robbins
    Resource Recovery Limited Partnership, operates this facility under a
    long-term operating lease. By virtue of this 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." The State has repealed the Retail Rate
    Law insofar as it applied to this facility. As the result of the failure of
    the bill introduced in the Illinois State Legislature, which would have
    reinstated the Retail Rate Law and a recent decision in State court
    regarding procedural matters, Management of the Corporation determined that
    a charge against current earnings was required. Management considers this
    charge to be sufficient to cover the anticipated losses until the end of
    1999, reflecting the time period within which the Corporation expects the
    Courts to provide relief from the state government's repeal of the Illinois
    Retail Rate Law. This charge includes $23 million for modifications to the
    nonboiler systems of the plant, the associated down time and lack of revenue
    during the implementation of the modifications. Approximately 65% of the $60
    million is expected to have a cash flow impact in 1997; the balance will be
    expended over the following two years.

    (b) $32 million against the Energy Equipment Group representing the last
    phase of the Group's reorganization started in 1995 following the Ahlstrom
    Pyropower acquisition. These actions will result in a further reduction in
    operating costs with a more efficient product execution capability. This
    plan includes $14.5 million for the discontinuance of certain product lines
    including incremental costs on certain completed contracts. Approximately
    $9.2 million of the charge relates to the consolidation of the San Diego
    operations with the Group's activities in New Jersey. The $9.2 million
    includes approximately $5.2 million for personnel costs including severance
    and related benefits. The balance ($4 million) represents write-downs of San
    Diego assets (primarily land and buildings) in accordance with SFAS No. 121
    Accounting for the Impairment of Long-lived Assets and for Long-lived Assets
    to be Disposed of. These San Diego long-lived assets are now considered to
    be for sale and have been accounted for at their current market value less
    estimated cost to sell. The remaining balance of approximately $8.3 million
    is primarily related to the write-down of a Canadian co-generation plant in
    accordance with SFAS No.121. As a result of the current reorganization this
    co-generation plant is now considered to be for sale. The basis of this
    plant has been adjusted to its estimated fair market value less cost to
    sell. Approximately 70% of the Energy Equipment Group's charges mentioned
    above will have a cash impact. The expectation is that 50% of this cost will
    be paid out by year end and that the balance will be paid out during 1998.

                                       -8-
<PAGE>   10
    (c) $6.5 million against the Corporate and Financial Services Group as the
    result of the valuation of a subsidiary. This subsidiary (a manufacturer of
    Copper Extrusions) was not part of the Corporation's three core business
    groups, and was sold in the third quarter 1997.

    (d) In addition the Corporation recorded a $56.4 million pretax ($36.7
    million after tax) gain on the sale of Glitsch International, Inc.'s assets
    to Koch Engineering Company. This gain was included in other income in the
    second quarter. The Corporation received approximately $195.0 million in
    cash for the majority of the assets of Glitsch International, Inc. plus
    approximately $50.0 million in net assets to be realized. The remaining net
    assets of Glitsch International, Inc. have been valued at their current
    estimated realizable value which are not considered material to the overall
    operations of the Corporation. For segment reporting purposes, the earnings
    of Glitsch International, Inc. up to the closing date of June 27, 1997 were
    included in the operating results of the Corporation within the Energy
    Equipment Group.

The Corporation is in the process of establishing a new business unit within its
Engineering and Construction Group. The new entity will consolidate Foster
Wheeler Italiana, S.p.A., Foster Wheeler France, S.A. and Foster Wheeler Iberia,
S.A. under common management, headquartered in Milan, Italy.The existing
subsidiary companies will maintain their offices in Milan, Paris and Madrid,
respectively. Placing these three companies under the control of centralized
management will result in greater economies of scale, work distribution and
quality assurance. The Corporation expects the new structure to be in place by
January 1, 1998. On a pro forma basis, this business unit had revenues of
approximately $1.2 billion in 1996. In addition, the Corporation is also in the
process of consolidating its Reading, UK operations into one facility. Currently
the Reading, UK operations are housed in five different locations in the Reading
area. This consolidation will result in lower occupancy costs and improved
operating efficiency. The cost of implementing this reorganization, primarily
severance and lease costs, will be provided upon finalization of the detailed
plan during the fourth quarter of 1997. The Corporation anticipates recording a
pretax charge in the range of $10-$15 million.

       Nine months ended September 26, 1997 compared to nine months ended
                               September 27, 1996

The Corporation's consolidated backlog at September 26, 1997 totaled $7,222.6
million. This represented an increase of $307.0 million or 4% over the amount
reported as of September 27, 1996. The dollar amount of backlog is not
necessarily indicative of the future earnings of the Corporation related to the
performance of such work. 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 has been adjusted to reflect project cancellations,
deferrals, sale of subsidiary and revised project scope and cost. This
adjustment for the nine months ended September 26, 1997 was $377.0 million,
compared with $678.2 million for the nine months ended September 27, 1996.
Furthermore, the Corporation's future award prospects include several large
scale international projects and, because the large size and uncertain timing
can create variability in the Corporation's contract awards, future award trends
are difficult to predict with certainty.

The Engineering and Construction Group ("E & C Group"), had a backlog of
$5,134.3 million at September 26, 1997, which represented a 7% increase from
September 27, 1996 due primarily to orders awarded to the United Kingdom
subsidiary. The Energy Equipment Group had backlog of $1,671.6 million at
September 26, 1997, which represented a 6% decrease from backlog at September
27, 1996 due primarily to the sale of the assets of Glitsch International Inc.

New orders awarded for the nine months ended September 26, 1997 of $3,832.1
million were slightly lower than the level of orders reported for the nine
months ended September 27, 1996 of $3,913.4 million. Approximately 67% of new
orders for the nine months ended September 26, 1997 were for projects awarded to
the Corporation's subsidiaries located outside the United States. Key geographic
regions contributing to new orders awarded for the nine months ended September
26, 1997 were Southeast Asia, Europe, the Middle East and China.

Operating revenues increased in the nine months ended September 26, 1997 by
$250.4 million compared to the nine months ended September 27, 1996 to $3,025.7
million from $2,775.3 million. The E & C Group's operating revenues increased by
$305.9 million due to the increased levels reported by of the United Kingdom
subsidiary ($152.2 million), the subsidiaries in the United States ($124.8
million) and the Spanish subsidiary($30.7 million). The increase in the E & C
Group's operating revenues was partially offset by a decrease in the Energy
Equipment Group of approximately $50.6 million, primarily attributable to the
sale of the assets of Glitsch International Inc.


                                       -9-
<PAGE>   11
Gross earnings, which are equal to operating revenues minus the cost of
operating revenues, declined $109.8 million in the nine months ended September
26, 1997 as compared with the nine months ended September 27, 1996 to $253.0
million from $362.8 million. Approximately 70% of this decrease was related to
the operations of the Energy Equipment Group. The gross earnings were impacted
by the sale of the assets of Glitsch International Inc. and the provisions for
increased costs on three projects, which were initially bid and executed out of
the San Diego office. This operation has been closed and the execution of
contracts transferred to the New Jersey headquarters. In addition the E&C Group
recorded provisions amounting to approximately $24.0 million related to several
projects for which it is seeking recovery of a significant portion from clients.

Selling, general and administrative expenses decreased 3% in the nine months
ended September 26, 1997 as compared with the same period in 1996, from $214.5
million to $207.4 million. Other income in the nine months ended September 26,
1997 as compared with September 27, 1996 increased to $99.7 million from $25.2
million, primarily due to the gain on the sale of Glitsch International, Inc.'s
assets and the profit on the sale of a gas field in connection with the
development of a cogeneration facility in Italy. Other deductions in the nine
months ended September 26, 1997, of $56.5 million, were 4% higher than that
reported in the nine months ended September 27, 1996 primarily due to increased
interest expense.

The effective tax rate exceeds the U.S. statutory rate primarily due to state
taxes and the impact of foreign source earnings and losses.

The net loss for the nine months ended September 26, 1997 was $12.8 million or
$.31 per share, which included the special charge stated above of $27.4 million
after tax ($.67 per share). The net earnings for the nine months ended September
27, 1996 were $72.5 million or $1.79 per share.

      Three months ended September 26, 1997 compared to three months ended
                               September 27, 1996

New orders awarded for the three months ended September 26, 1997 of $1,164.7
million were 7% lower than new orders awarded for the three months ended
September 27, 1996 of $1,257.7 million. This seven percent decrease was
primarily due to a decline in new orders of $228.9 million in the North American
subsidiaries in the Energy Equipment Group offset by increased new orders
awarded of $217.1 million to the United Kingdom subsidiary in the E & C Group.
Approximately 49% of new orders in the three months ended September 26, 1997
were for projects awarded to the Corporation's subsidiaries located outside the
United States.

Operating revenues increased in the three months ended September 26, 1997 by
$69.1 million or 7% compared to the three months ended September 27, 1996 to
$1,030.0 million from $960.9 million. The United Kingdom subsidiary accounted
for the majority of the increase in revenues in the E & C Group. This was offset
by decreased revenues in the Energy Equipment Group primarily due to the sale of
the assets of Glitsch International, Inc.

Gross earnings decreased $108.5 million to $19.5 million from $128.0 million or
85% in the three months ended September 26, 1997 as compared with the three
months ended September 27, 1996. Approximately 55% of this decrease was related
to the operations of the Energy Equipment Group. The gross earnings were
impacted by the sale of the assets of Glitsch International Inc. and the
provisions for increased costs on three projects, which were initially bid and
executed out of the San Diego office. This operation has been closed and the
execution of contracts transferred to the New Jersey headquarters. In addition
the E&C Group recorded provisions amounting to approximately $24.0 million
related to several projects for which it is seeking recovery of a significant
portion from clients.

Selling, general and administrative expenses decreased 15% in the three months
ended September 26, 1997 as compared with the same period in 1996, from $74.8
million to $63.4 million. This reduction was caused by a decline in expenses in
the Energy Equipment Group primarily due to the sale of the assets of Glitsch
International, Inc.

The net loss for the three months ended September 26, 1997 was $29.3 million or
$.72 per share. The net earnings for the three months ended September 27,1996
were $24.0 million or $.59 per share.




                                      -10-
<PAGE>   12
FINANCIAL CONDITION


Stockholders' equity for the nine months ended September 26, 1997 decreased
$63.2 million, due to the fluctuation in the accumulated translation adjustment
resulting from the strengthening U.S. dollar against European currencies,
payment of dividends and the loss of $12.8 million recorded for the nine months.

During the nine months ended September 26, 1997, the Corporation's long-term
investments in land, buildings and equipment were $135.8 million as compared
with $92.3 million for the comparable period in 1996. Approximately $92.9
million was invested by the Power Systems Group in build, own and operate
projects during the first nine months of 1997. During the next few years,
capital expenditures will continue to be directed primarily toward strengthening
and supporting the Corporation's core businesses.

Since December 27, 1996, long-term debt, including current installments, and
bank loans increased by $72.1 million, exclusive of repayments of $77.3 million,
primarily due to borrowings to fund investments in build, own and operate
projects and current working capital requirements.

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


LIQUIDITY AND CAPITAL RESOURCES


Cash and cash equivalents totaled $142.4 million at September 26, 1997, a
decrease of $124.7 million from fiscal year end 1996; also, short-term
investments decreased by $23.3 million to $113.9 million. During the first nine
months of fiscal 1997, the Corporation paid $25.4 million in dividends to
stockholders and repaid debt of $77.3 million. Cash used by operating activities
amounted to $103.7 million including a $45.0 million initial lease payment on
the Robbins Resource Recovery Facility. New borrowings totaled $72.1 million,
resulting from investments by the Power Systems Group in build, own and operate
projects and requirements to fund current working capital needs. In total, the
Power Systems Group invested approximately $92.9 million in the construction of
cogeneration and other industrial facilities.

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. The Management of the Corporation
expects its customers' requests for more favorable payment terms under the
Energy Equipment 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.

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 December 27, 1996 there were
approximately 92,600 claims pending. Approximately 25,400 new claims were filed
in 1997 and approximately 34,700 were either settled or dismissed without
payment (including approximately 22,000 claims dismissed by a Federal District
Court without prejudice which are subject to being refiled). As a result, on
September 26, 1997, there were approximately 83,300 claims pending. Any
settlement costs not covered by the Corporation's insurance carriers were
immaterial. The Corporation has agreements with insurance carriers covering a
substantial portion of the potential costs relating to these exposures. The
Corporation has recorded, with respect to asbestos litigation, an asset relating
to probable


                                      -11-
<PAGE>   13
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 for the Village of Robbins, Illinois. A subsidiary of
the Corporation, Robbins Resource Recovery Limited Partnership (the
"Partnership"), will operate this facility under a long-term operating lease. By
virtue of the 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 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 has repealed
the Retail Rate Law insofar as it applied to this facility. The Partnership is
contesting the Illinois legislature's partial repeal of the Retail Rate Law in
court. 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 project.

Management of the Corporation believes that cash and cash equivalents of $142.4
million and short-term investments of $113.9 million at September 26, 1997,
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.


OTHER ACCOUNTING MATTERS


Statement of Financial Accounting Standards No. 128 "Earnings per Share" was
issued in February 1997. This statement establishes standards for computing and
presenting earnings per share (EPS). This Statement is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods; earlier application is not permitted. The Corporation does not
anticipate a significant impact from the application of this statement. In June
1997, the Financial Accounting Standards Board issued Statements of Financial
Accounting Standards No. 130 ("Reporting Comprehensive Income") and No. 131
("Disclosures about Segments of an Enterprise and Related Information"). The
Corporation is currently evaluating their impact on the Corporation's financial
statement disclosure.


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.




                                      -12-
<PAGE>   14
PART II. - OTHER INFORMATION


Item 6. - Exhibits and Reports on Form 8-K

    a)  Exhibits

<TABLE>
<CAPTION>
        Exhibit
        Number        Exhibit
        -------       -------
<S>                   <C>
        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.)
</TABLE>

     b) Reports on Form 8-K

           None




                                      -13-
<PAGE>   15
                                   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: November 7, 1997         /S/ Richard J. Swift
               ----------------         ---------------------------
                                            Richard J. Swift
                                            Chairman, President and
                                            Chief Executive Office



         Date: November 7, 1997         /S/ David J. Roberts
               ----------------         ---------------------------
                                            David J. Roberts
                                            Vice Chairman and
                                            Chief Financial Officer




                                      -14-