Foster Wheeler Faces 110,700 Cases at End-2001 ---------------------------------------------- Published September 13, 2002 Foster Wheeler Ltd. reports that it has recorded a liability for probable losses on asbestos-related insurance claims of about $500,000 and an asset for probable recoveries of the same amount, net of an $18,000 reserve. About $60,000 of the balance is classified as short- term while the remainder is considered long-term. The liability is an estimate of future defense costs and indemnity payments, which are based upon assumed average claim resolution costs applied against currently pending and estimated future claims. The asset is an estimate of recoveries from insurers based upon assumptions relating to cost allocation and resolution of pending litigation with certain insurers, as well as recoveries under a funding arrangement with other insurers, which has been in place since 1993. The amount spent on asbestos litigation defense and case resolution, which was reimbursed or will be reimbursed from insurance coverage, was $66,900 in 2001, $56,200 in 2000 and $40,400 in 1999. On March 26, 2002, a San Francisco, California jury found Foster Wheeler liable for $10,600 in a case brought by a 59-year-old man suffering from mesothelioma that he claimed resulted from exposure to asbestos. The company says it believes there was no credible evidence presented by the plaintiff that he was exposed to asbestos contained in a Foster Wheeler product. In addition, the company believes that the verdict was excessive and should be set aside or reduced on appeal. The company intends to move to set aside the verdict. Some of the company's subsidiaries are also named as defendants in numerous lawsuits and out-of-court informal claims pending in the United States in which the plaintiffs claim damages for personal injury arising from exposure to asbestos in connection with work performed and heat exchange devices assembled, installed or sold by those subsidiaries, and the subsidiaries expect to be named as defendants in similar suits and claims filed in the future. The company says its asbestos-related insurance recoveries are uncertain. To date, insurance policies have provided coverage for substantially all of the asbestos costs. An agreement with a number of insurers to allow for efficient handling of claims against the company's subsidiaries will not cover claims filed after June 12, 2001. The company is in talks with its insurers for an arrangement for handling asbestos claims filed after June 12, 2001. Number of Claims 2001 2000 1999 ---- ---- ---- Balance, beginning of year 92,100 73,600 62,400 New claims 54,700 41,300 30,700 Claims resolved (36,100) (22,800)(19,500) Balance, end of year 110,700 92,100 73,600 COMPANY SNAPSHOT Foster Wheeler Ltd. Perryville Corporate Park Clinton, NJ 08809-4000 Phone: 908-730-4000 Fax: 908-730-5315 http://www.fwc.com Employees : 10,394 Revenue : $ 3,392,474,000 Net Income (Loss) : ($309,143,000) Assets : $ 3,316,379,000 Liabilities : $ 3,308,832,000 No. Of Asbestos Claims : 110,700 Estimated Asbestos Liabilities : $ 500,000 Insurance Recoveries : $ 500,000 (For the year ended December 28, 2001) Business Description: Foster Wheeler Ltd. operates through two business groups. The Engineering and Construction group designs and builds chemical, petroleum, and industrial plants, which produce such items as fine chemicals, fragrances, food additives, and vitamins. It also provides environmental remediation services. Foster Wheeler's Energy Equipment group makes steam generating units and related equipment for power and industrial plants, including feedwater heaters and steam condensers. In addition, the group builds, owns, and leases cogeneration and independent power projects.