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Actual results may defer substantially from such forward-looking statements. A discussion of factors that could cause actual results to vary is contained in Foster Wheeler's annual and quarterly reports filed with the SEC. The company's Form 10-Q is being filed today with the SEC.We are hosting the call today from our office in Zug, Switzerland. Joining me here are Kent Masters, our Chief Executive Officer; Umberto della Sala, our Chief Operating Officer and CEO of the Global E&C Group; Franco Baseotto, who is our Executive VP, CFO and Treasurer; and Gary Nedelka, CEO of our Global Power Group. After our prepared remarks, we’ll have time to take your questions. And on that note, I will turn it over to Kent. Kent Masters Thanks, Scott, and good day, everyone. Thank you for joining us on the call. After my introductory comments, I’ll ask Franco to summarize the consolidated and business group financial results and the company’s cash position. Umberto and Gary will talk about their respective businesses and then I will comment on guidance. So let’s start with slide number two, where you can see the highlights for the quarter. Clearly we were disappointed in the Q2 results. The company’s net income was below the average quarter of 2011, even though scope revenues were higher in both business groups, our EBITDA declined due to higher sales pursuit costs mainly proposal costs, as well as unfavorable utilization rates and other items that Franco will describe to you in a moment. Our Q2 results are certainly not indicative from the quarterly run rate and we continue to expect that 2012 earnings per share will be materially higher than 2011. As you’ll hear from Umberto and Gary in a few minutes, we are even more optimistic about potential contract wins over the coming months. In particular, selected prospects in the Global E&C Group are gaining momentum, we say that based on client feedback and in some cases letters of award that we have received.
In a similar vein, our Global Power Group had also received a fair number of award letters for projects that are expected to move forward once the client finalized their closing requirements.As you can see on the second slide, we are adjusting our 2012 guidance for the two business groups. I’ll cover this in more detail at the end of the presentation. As I said, we continue to expect that our earnings per share in 2012 will be materially higher than they were in 2011. And now, I’ll turn the presentation over to Franco to cover the second quarter financials. Franco Baseotto Thank you, Kent. If you now turn to slide three, you will see the detail results for the quarter. Our adjusted net income for the quarter was $34.1 million or $0.32 per diluted share, as compared to $43.1 million or $0.36 per share in the average quarter of 2011. The decline was due to lower EBITDA in both business groups. As Kent mentioned, highest sales pursuit costs mainly proposal costs, as well as unfavorable utilization rates contributed to the reduction in EBITDA. However, I’d like to mention three additional items that contributed to the decline in EBITDA and in turn to the declining adjusted net income for the second quarter. The first item is a charge that relate to the penalty component of an adverse tax court decision. The tax authorities had a judicial appeal of an earlier decision that had been issued in our favor and the most recent decision went against us. We are now appealing this most recent decision. However, in the second quarter we increased our tax provision for the second quarter by $1.4 million and we increased our penalties and increased on our recognized tax benefit by $2.8 million. The second item on the list is foreign exchange transaction loss of $3.2 million. This is largely an offset of the transaction gain we are realized in the first quarter of this year and we wanted to mention the Q2 number because in combination with the tax penalty, I just mentioned, it has explained the increase in other deduction on the income statement. Separately, with respect to segment EBITDA, this $3.2 million is roughly spilt between our Engineering, Construction and Global Power Group’s.
The third item on the list is one quarter delay in the profit recognition on a recently signed license agreement in the Global Power Group. We mentioned this one because it is a discrete event with the known profit accrue that simply slipped and this contributed to the lower than expected margin performance in the Power Group in Q2, but we will speak up that up in Q3.Read the rest of this transcript for free on seekingalpha.com