UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

R	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended August 31, 2011
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: 1-12227

THE SHAW GROUP INC.

(Exact name of registrant as specified in its charter)

LOUISIANA	72-1106167
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4171 Essen Lane

Baton Rouge, Louisiana 70809

(Address of principal executive offices) (Zip Code)

(225) 932-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock — no par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes R     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No R

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 R     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R	Smaller reporting company o
Non-accelerated filer o  (Do not check if a smaller reporting company)	Accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No R

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was approximately $2.9 billion (computed by reference to the closing sale price of the registrant’s common stock on the New York Stock Exchange (NYSE) on February 28, 2011, the last business day of the registrant’s most recently completed second fiscal quarter). Common stock held as of such date by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding at October 26, 2011 was 71,310,071.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its 2012 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission (the SEC) within 120 days of August 31, 2011, are incorporated by reference into Part III of this Annual Report on Form 10-K for the fiscal year ended August 31, 2011 (Form 10-K).

TABLE OF CONTENTS

PART I
Item 1.	Business
Item 1A.	Risk Factors
Item 1B.	Unresolved Staff Comments
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	(Removed and Reserved)
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.	Controls and Procedures
Item 9B.	Other Information
PART III
Item 10.	Directors, Executive Officers and Corporate Governance
Item 11.	Executive  Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.	Certain Relationships and Related Transactions, and Director Independence
Item 14.	Principal Accounting Fees and Services
PART IV
Item 15.	Exhibits, Financial Statement Schedules

i

GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:

ABWR	Advanced boiling water reactor
AQC	Air quality control
AP1000®	AP1000 is a registered trademark of Westinghouse Electric Co., LLC
AR	Accounts receivable
ASC	Accounting Standards Codification
ASME	American Society of Mechanical Engineers
ASU	Accounting Standards Update
Badger	Badger Technologies Holdings L.L.C.
BNFL	British Nuclear Fuels plc
CAP	Compliance Assurance Process
CCGT	Combined-cycle gas turbine
CERCLA	Comprehensive Environmental Response, Compensation and Liability Act
CIE	Costs and estimated earnings in excess of billings
COL	Combined operating license
Corps	U.S. Army Corps of Engineers
COSO	Committee of Sponsoring Organizations of the Treadway Commission
CRA	Commercial relationship agreement
DJ  Heavy Construction	Dow Jones US Heavy Construction
DOE	U.S. Department of Energy
E&C	Our Energy and Chemicals segment
E&I	Our Environmental and Infrastructure segment
EBIT	Earnings before interest expense and income taxes
EBITDA	Earnings before interest expense, income taxes, depreciation and amortization
EHS	Environmental Health and Safety
EPA	U.S. Environmental Protection Agency
EPC	Engineering, procurement and construction
EPU	Extended power uprate
ERISA	Employee Retirement Income Security Act
EU	European Union
Exchange Act	Securities Exchange Act of 1934, as amended
F&M	Our Fabrication and Manufacturing segment
Facility	Our unsecured Second Amended and Restated Credit Agreement, dated as of June 15, 2011
FASB	Financial Accounting Standards Board
FCC	Fluid catalytic cracking
FCPA	U.S. Foreign Corrupt Practices Act
FEED	Front-end engineering and design
FEMA	Federal Emergency Management Agency
FIFO	First-in, first-out
GAAP	Accounting principles generally accepted in the United States
GHGs	Greenhouse gases
IAEA	International Atomic Energy Agency
IDIQ	Indefinite delivery, indefinite quantity
IHI	Ishikawajima-Harima Heavy Industries Co., Ltd.
Interest LC	The additional letters of credit for $77.9 million at August 31, 2011, for the benefit of NEH related to interest on the Westinghouse Bonds (defined below).
Investment in Westinghouse	Our 20% interest in Toshiba Nuclear Energy Holdings (US), Inc. and Toshiba Nuclear Energy Holdings (UK), Ltd. Acquired in October 2006
IRS	Internal Revenue Service
IT Group	IT Group, Inc.
JPY	Japanese Yen
LEED	Leadership in Energy and Environmental Design
LGP	Loan Guarantee Program
LIBOR	London Interbank Offered Rate
LNG	Liquefied natural gas
NEH	Nuclear Energy Holdings LLC, our wholly-owned special purpose acquisition subsidiary
NOx	Nitrogen oxides
NRC	Nuclear Regulatory Commission
NYSE	New York Stock Exchange
OSHA	Occupational Safety and Health Administration

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PAA	Price-Anderson Act
Principal LC	A letter of credit for approximately $55.8 million at August 31, 2011, established by us for the benefit of NEH related to the principal on the Westinghouse Bonds (defined below).
PRPs	Potentially responsible parties
Put Option	Japanese Yen-denominated put option agreements entered into in connection with the acquisition of our Investment in Westinghouse
RCRA	Resources Conservation and Recovery Act
S&P	Standard & Poor’s
S&P 500	Standard & Poor’s 500 index
SAR	Stock appreciation rights
Sarbanes-Oxley	Sarbanes-Oxley Act of 2002, as amended
SEC	United States Securities and Exchange Commission
Securities Act	The Securities Act of 1933, as amended
SG&A	Selling, general and administrative
SHARQ	A grassroots ethylene plant for Eastern Petrochemical Company in Saudi Arabia
Shaw-Nass	Shaw-Nass Middle East, W.L.L.
SO2	Sulfur dioxide
Stone & Webster	Stone & Webster, Inc.
Syngas	Synthesis gas
TNEH-UK	Toshiba Nuclear Energy Holdings (UK), Ltd.
TNEH-US	Toshiba Nuclear Energy Holdings (US), Inc.
VIE	Variable interest entity
Westinghouse	Our Investment in Westinghouse, along with its subsidiaries
Westinghouse Bonds	The JPY 128.98 billion (equivalent to approximately $1.1 billion)  limited recourse bonds issued by NEH on October 13, 2006 and maturing on March 15, 2013 used to partially finance our Investment in Westinghouse.
Westinghouse Equity	Our 20% equity interest in Westinghouse, held by Nuclear Energy Holdings

iii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Form 10-K may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those described in (1) Part I, Item 1A — Risk Factors and elsewhere in this Form 10-K, (2) our reports and registration statements filed from time to time with the SEC and (3) other announcements we make from time to time.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

PART I

Item 1.  Business.

General

The Shaw Group Inc. (Shaw, we, us, and our) is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services to a diverse client base that includes regulated electric utilities, independent and merchant power producers, government agencies, multinational and national oil companies, and industrial corporations. We have developed and acquired significant intellectual property, including induction pipe bending technology, environmental decontamination technologies, and downstream petrochemical technologies. Through our investment in the Westinghouse Group, we have exclusive opportunities to bid on engineering, procurement and construction (EPC) services on future Westinghouse advanced passive AP1000® nuclear power technology units to be built in the United States (U.S.) and other locations. (AP1000 is a trademark or registered trademark in the U.S. of Westinghouse Electric Co. LLC, its subsidiaries and/or its affiliates. This mark also may be used and/or registered in other countries throughout the world. All rights reserved. Unauthorized use is strictly prohibited. Other names may be trademarks of their respective owners.)  Our proprietary olefin and refinery technologies – coupled with ethyl benzene, styrene, cumene, and bisphenol A technologies – allow us to offer clients integrated oil refinery and petrochemicals solutions. We believe our technologies, which span our business units companywide, provide us with a competitive, long-term advantage in the marketplace.

Shaw has significant experience in effectively managing subcontractors, craft labor, and materials procurement associated with the construction of oil refineries, petrochemical plants, electric power generation plants, and other industrial facilities. We have the versatility to function on any given project as the primary contractor, subcontractor, or quality assurance construction manager. We provide technical and economic analysis and consulting to a global client base primarily in the fossil, nuclear power, environmental, energy, and chemicals industries.

We report our financial results using August 31st as our fiscal year end. Accordingly, our fiscal quarter end dates are as follows:

First Quarter	November 30th
Second Quarter	February 28th
Third Quarter	May 31st
Fourth Quarter	August 31st

Our stock trades on the NYSE under the ticker symbol “SHAW.” We are a Louisiana corporation with our executive offices located at 4171 Essen Lane, Baton Rouge, Louisiana 70809, and our telephone number is (225) 932-2500.

History

In 1986, J. M. Bernhard, Jr., our Chairman, President and Chief Executive Officer, and two colleagues, founded Shaw as a pipe fabrication shop in Baton Rouge, Louisiana. Since then we significantly have expanded our expertise and breadth of services through organic growth and strategic acquisitions.

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In July 2000, we acquired certain assets of Stone & Webster, Inc. (Stone & Webster), a leading global provider of EPC, construction management and consulting services to the energy, chemical, nuclear, environmental, and infrastructure industries. Combined with our existing pipe fabrication and construction capabilities, the Stone & Webster acquisition transformed Shaw into a vertically integrated EPC services company.

Our May 2002 acquisition of select assets of the IT Group, Inc. (IT Group) significantly expanded our position in the environmental remediation and infrastructure markets, particularly in the U.S. government services sector. The acquisition further diversified our clientele and contract mix and provided new opportunities to cross-sell services, such as environmental remediation, to our existing EPC clients.

In October 2006, we acquired a 20% interest in two companies (our Investment in Westinghouse) who, together with their subsidiaries, are collectively referred to as the Westinghouse Group (Westinghouse). Westinghouse provides advanced nuclear plant designs and equipment, fuel, and a wide range of other products and services to the owners and operators of nuclear power plants. We intend to divest our Investment in Westinghouse no later than January 2013. In addition to our Investment in Westinghouse, we are parties to a commercial relationship agreement (CRA) with Westinghouse, which provides us certain exclusive opportunities to bid on projects for which we would perform EPC services for future projects using Westinghouse’s nuclear AP1000 technology. This agreement will remain in effect until such time as our subsidiary, Nuclear Energy Holdings, L.L.C. exercises its put options to sell its shares in Westinghouse to Toshiba. For an explanation of this investment, see Part I, Item 1 — Business — Investment in Westinghouse Segment, below.

Our Business Segments

Because of the wide variety of our technical services and our vertical integration, we believe we are uniquely positioned to provide seamless services to our clients through the lifespan of projects, from the concept, design, building, and construction phases to the maintenance, operations, decommissioning, and decontamination phases. We believe our direct-hire construction capabilities provide us with a competitive advantage in many of the industries we serve.

Our segments strive to support and complement each other, enabling Shaw to rely on internal resources for much of our work.

Currently, we are organized under the following seven reportable segments:

•      Power,

•      Plant Services,

•      Environmental & Infrastructure (E&I),

•      Energy & Chemicals (E&C),

•      Fabrication & Manufacturing (F&M),

•      Investment in Westinghouse, and

•      Corporate

For detailed financial information and geographical sales information regarding each segment, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 16 — Business Segments included in our consolidated financial statements beginning on page F-2. In addition, see Item 1A — Risk Factors for a discussion of the risks related to our foreign operations.

Power Segment

Our Power segment provides a range of services, including design, EPC, technology and consulting services, primarily to the fossil and nuclear power generation industries.

Nuclear Power Generation.  Approximately 19% of the electric power generated in the U.S. is from nuclear power plants. We provide a wide range of technical services, including engineering, design, procurement, construction, and project management, to the domestic and international nuclear power industry. We have been awarded three EPC contracts to build six AP1000 nuclear power units in the U.S. — two units each for Georgia Power, South Carolina Electric & Gas, and Progress Energy. In China, we are providing technical and project management services for four AP1000 nuclear power units at two sites and have an initial contract for an additional two AP1000 nuclear units at a third site.

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Nuclear Services.  In addition to our expertise in new plant construction, we are recognized in the power industry for improving the efficiency, capacity output, and reliability of existing nuclear plants through power uprates and life-cycle management. We perform EPC services to restore, renovate, or modify those plants. The projects represent a competitive cost alternative to new plant construction and are expected to be an important component in the expansion of U.S. power generation and our Power segment. In 2011, we entered into a contract to provide EPC services on approved projects designed to extend the life cycle of major components at American Electric Power’s Cook Nuclear Plant in Michigan.

Gas-Fired Generation. Approximately 22% of electric power generated in the U.S. is from natural gas-fired power plants. We continue to observe increased activity in gas-fired electric generation, as electric utilities and independent power producers look to diversify their assets. In addition, in many states, initiatives to reduce carbon dioxide and other greenhouse gas emissions, as well as anticipated demand for additional electric power generation capacity, have stimulated renewed interest in gas-fired power plants. Gas-fired plants generally are less expensive to construct than coal-fired and nuclear power plants but have comparatively higher operating costs. We expect power producers to increase capital spending in the U.S. on gas-fired power plants to take advantage of relatively inexpensive natural gas prices. We expect gas-fired power plants to continue to be an important component of long-term power generation in the U.S. and internationally. We believe our capabilities and expertise position us well to capitalize on opportunities in this area. We are building two combined-cycle gas turbine (CCGT) gas plants in North Carolina and completed a CCGT plant in Nevada in 2011. We have seen increased activity in this area as evidenced by a fourth-quarter EPC services award for a nominal 550-megawatt CCGT gas turbine plant for Entergy’s Ninemile Point Steam Electric Station near New Orleans, Louisiana.

Clean Coal-Fired Generation.  Approximately 44% of electric power generated in the U.S. is from coal-fired power plants. Electric power companies in the U.S. historically have pursued construction of new coal-fired power plants because, although coal-fired capacity is capital-intensive to build, it generally has relatively lower operating costs compared to other fossil fuels, and the U.S. has significant coal reserves. However, uncertainty surrounding potential regulations targeting carbon and other emissions, as well as the global economic downturn and low natural gas prices, has caused the development of coal and other solid fuel-fired power plants to slow significantly. Nevertheless, we believe coal will continue to be a component of future U.S. energy generation, and we intend to capture a significant share of any new-build, retrofit or expansion projects.

Air Quality Control (AQC).  We service the domestic and international markets for flue gas desulfurization retrofits, installation of mercury emission controls, fine-particle pollution control, carbon capture systems, and selective catalytic reduction processes for fossil-fueled power plants. AQC activity is heavily dependent on federal and state regulation of air pollution and has declined in recent years as new air regulations are being developed by states and the U.S. Environmental Protection Agency (the EPA).

In July 2011, the EPA finalized the Cross-State Air Pollution Rule, which replaces the court-vacated Clean Air Interstate Rule. The Cross-State Air Pollution Rule is designed to reduce sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions. Also, in March 2011, the EPA proposed Mercury and Air Toxics Standards for power plants, which replaces the court-vacated Clean Air Mercury Rule. These rules are subject to a number of legal challenges in the U.S. Court of Appeals for the D.C. Circuit, with lawsuits having only recently been filed in September 2011 by a power generation company and by the States of Kansas and Texas. As the first-ever national standard for mercury and other hazardous air pollutants from power plants, Mercury and Air Toxics Standards are expected to require many power plants to install pollution-control technologies to reduce these emissions. The final rule is anticipated by the end of 2011. Regulation of greenhouse gases by the EPA under the Clean Air Act began in January 2011 and will require covered parties to implement best-available control technologies that are determined by state or federal permitting authorities on a case-by-case basis.

We are working with owners of fossil-fueled power plants to evaluate the impact of the regulatory initiatives these regulations and develop compliance strategies. We anticipate increased opportunities for the installation of various air pollution-control technologies as these regulatory initiatives are finalized and placed into effect.

Plant Services Segment

Our Plant Services segment is a market leader, providing a full range of integrated asset life-cycle capabilities that complement our power and industrial EPC services. We provide clients with electric power refueling outage maintenance, turnaround maintenance, routine maintenance, offshore maintenance, modifications, capital construction, off-site modularization, fabrication, reliability engineering, plant engineering, plant support, and specialty services. We perform services to restore, rebuild, repair, renovate, and modify industrial facilities, as well as offer predictive and preventive maintenance. Our Plant Services segment operates at client work sites primarily in North America.

Nuclear Plant Maintenance and Modifications. We provide systemwide maintenance and modification services to approximately 39% of the 104 operating nuclear power reactors in the U.S., including the country’s two largest nuclear fleets. Those services include engineering, maintenance, and modification services at various times to support daily operations, plant refueling outages, life/license extensions, materials upgrades, capacity uprates, and performance improvements.

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In addition, we provide a continuum of support and planning between refueling outages and maintain an experienced core team of professionals. We concentrate on complicated, noncommodity projects in which our historical expertise and project management skills add value. We can further expand supplemental nuclear plant modifications for existing clients and are capable of providing services to international clients operating nuclear plants.

Fossil Plant Maintenance and Modifications. In addition to nuclear plant maintenance, we provide or offer services to fossil generating facilities including coal and natural gas plants. Our nuclear maintenance expertise and construction planning and execution skills support the services we provide to fossil power clients.

Industrial Maintenance and Modifications. We have a continuous presence at several U.S. field locations serving alternative energy, petrochemical, specialty chemical, oil and gas, steel, manufacturing, and refining industries. We offer comprehensive services to clients in combinations that increase capacity, reduce expenditures, and optimize costs to enable higher returns on production within their facilities.

Capital Construction. Our capital construction experts bring decades of experience to serve clients in chemical, petrochemical, refining, and power industries throughout the U.S. Our construction scope includes constructability reviews, civil and concrete work, structural steel erection, electrical and instrumentation services, mechanical and piping system erection, and modular construction. We also can successfully mobilize resources under demanding client deadlines to rebuild and restore facilities damaged by natural disasters or catastrophes.

Environmental & Infrastructure (E&I) Segment

Our E&I segment provides full-scale environmental and infrastructure services for government and private-sector clients around the world. These services include program and project management, design-build, engineering and construction, sustainability and energy efficiency, remediation and restoration, science and technology, facilities management, and emergency response and disaster recovery.

Program Management. We manage large federal, state, and local government programs, including capital improvement, emergency response and disaster recovery, and energy efficiency programs, as well as private-sector commercial programs. We provide planning, program management, operations management, and technical services for clients such as FEMA and for state-run energy efficiency programs in Illinois, Louisiana, Missouri and Wisconsin. We staff projects with experienced professionals and provide clients with a single point of accountability. Our integrated business teams provide expertise and consistency throughout each program.

Design-Build. We use our proficiencies in engineering, design, procurement, operations, construction, and construction management for all design-build phases of large infrastructure projects. Valued at approximately $1.2 billion, our Inner Harbor Navigation Canal Surge Barrier project in New Orleans, Louisiana, recently achieved its milestone of 100-year-level storm protection. Nearly two miles long, it is the largest design-build civil works project ever awarded by the U.S. Army Corps of Engineers (Corps) and part of a system designed to better protect the greater New Orleans area from the storm surge that often accompanies hurricanes and tropical storms. Also, Shaw AREVA MOX Services, LLC is under contract with the U.S. Department of Energy (DOE) to design, license, and construct the approximately $4.5 billion mixed oxide fuel fabrication facility in Aiken, South Carolina – a first-of-its-kind facility in the U.S. to process weapons-grade plutonium into fuel for nuclear power generating plants. Additionally, we provide a range of cost-effective green building solutions, including those that meet requirements for Leadership in Energy and Environmental Design (LEED) certified structures for the federal government, helping our clients achieve sustainability goals and save energy.

Environmental Remediation. As a leading environmental remediation contractor, we provide a full range of engineering, design, construction, and scientific services to clients in the chemical, energy, real estate, manufacturing, and transportation sectors. We execute complex remediation and restoration projects at U.S. government sites contaminated with hazardous wastes. For more than a decade, we have provided remediation services at multiple sites for the Corps’ Formerly Utilized Sites Remedial Action Program. We also possess extensive munitions response experience and have responded to munitions and explosives of concern at Formerly Used Defense Sites, Base Closure and Realignment facilities and Department of Defense bases. Our technological capabilities such as laboratory assessments, field testing, and analytic evaluation support a wide range of client needs, including groundwater modeling, contaminant transport, and soil washing. Additionally, we have one of the largest production capacities of microbial cultures in the industry, allowing for the biological remediation of contaminated groundwater and the sale of cultures to licensees.

Emergency Response & Recovery. We provide emergency response, relief and recovery services for clients and communities around the world. Our specialized resources and equipment, including real-time professional staffing deployments and technological capabilities, enable quick response to adverse environmental, health, safety, and economic impacts resulting from natural disasters, industrial incidents or acts of terrorism. Following the massive earthquake and tsunami that struck Japan in 2011, we began working with Toshiba Corp. to provide engineering, design, consulting, environmental and remediation services at the Fukushima Daiichi nuclear power plant. In addition, we have responded to numerous emergencies, including hurricanes Katrina, Rita, Ike, and Gustav; the earthquake in Haiti; the Deepwater Horizon oil spill in the Gulf of Mexico; and, most recently, the outbreak of flooding and tornados in both the midwestern and southeastern U.S.

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Coastal, Maritime and Natural Resource Engineering and Restoration. We provide engineering and design services, including port and waterway navigation feasibility and development, sediment management, coastal engineering, environmental services, levee development and barrier island and shoreline protection and restoration. We also perform wetlands construction, mitigation, and restoration. Many of our projects are generated by the Coastal Wetlands Planning Protection and Restoration Act, which provides federal funds to restore and conserve coastal wetlands and barrier islands. In response to the Deepwater Horizon oil spill, we managed the construction of barrier berms for the state of Louisiana and continue to provide surveying, monitoring, and project management services. Our acquisition of Coastal Planning & Engineering, Inc. in March of 2011 strengthens our coastal restoration and port expansion expertise, as well as our ability to provide offshore support for the oil and gas industry.  In addition, the CPE trade name enables us to leverage the CPE reputation within these markets.

General Infrastructure and Transportation. We provide construction management and program management for infrastructure projects related to transportation, water, and wastewater systems. We are helping to manage construction of the Croton Water Filtration Plant, a project that will improve water quality for 8 million New Yorkers. In addition, our work for the Federal Transit Administration includes more than 20 years of program management oversight services for complex infrastructure projects. We also offer a full range of technical and management services to design, plan, engineer, construct, and renovate highways, railways, transit systems, waterways, and airports. U.S. municipal agencies such as the San Francisco Public Utilities Commission have engaged us for major water infrastructure needs, which include water system improvements and wastewater services such as planning, collection, and treatment, as well as plant construction.

Facilities Management. We offer operations, engineering, design, maintenance, construction, consulting, and technology-based solutions to help U.S. government clients maintain and operate large mission-critical facilities and functions. We provide services such as logistics and communications support, fuels management, grounds and equipment maintenance, asset management, repairs, and renovations at numerous military installations, including Forts Rucker, Benning, Richardson, and Wainwright. Additionally, we have been awarded five consecutive contracts to provide operations support and research services at the EPA Test and Evaluation Facility in Ohio and perform onsite research activities at three other EPA National Risk Management Research Laboratories.

Energy & Chemicals (E&C) Segment

Our E&C segment provides a full range of project services to the oil and gas, refining, petrochemical, and upstream industries globally. Our services include consulting, technology licensing, project management, engineering, procurement, construction, commissioning, and startup. We are differentiated by our process technologies, many of which are proprietary, and our ability to develop, commercialize, and integrate new technologies. We perform projects that range from small consulting studies to large EPC projects within five major industry areas: consulting, ethylene, chemicals/petrochemicals, refining, and upstream.

Consulting. This business provides independent commercial, financial, and technical management advice to operating and financial companies, developers, utilities, and governments. For the short- to mid-term, global uncertainties and risk avoidance by investors likely will lead to slow growth prospects for industries served by our E&C Segment. However, we anticipate some increased activity in oil and gas and processing areas, renewable energy supply, and power transmission. Services associated with mergers and acquisitions due diligence for clients also are expected to rise.

Ethylene. The process to manufacture of ethylene is one of Shaw’s core proprietary technologies. Produced by the steam cracking of hydrocarbon feedstocks, ethylene and its co-products − propylene, butenes, butadiene, and aromatics such as benzene, toluene, and xylene − are key building blocks for other petrochemicals and polymers. We provide a range of project services to support this technology, from conceptual studies through detailed design and EPC. We have designed and/or built more than 120 grassroots units and a similar number of revamps/expansions, which provide a significant portion of the world’s ethylene supply. A key component of our ethylene technology is our advanced furnace technology, which is based on more than 40 years of research, design, and operating experience. Since 1996, Shaw has licensed more than 180 furnaces. All were installed in grassroots or revamp projects that, together, produce more than 17 million metric tons of ethylene per year.

We see activity in the Middle East, where projects are likely to proceed because of the availability of low-cost feedstock, and in China and India, where ethylene markets seem to be affected less by the economic slowdown. In North America, low natural gas prices, through shale gas developments, are making ethylene production more competitive, leading to potential plant and furnace expansions as well as plans for grassroots units. We also believe that as owners seek to increase propylene production and maximize overall productivity, there will be greater opportunities to revamp existing facilities during the next several years.

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Petrochemicals. We are a leading provider of proprietary technology, engineering, procurement, construction, commissioning, startup, operations, and maintenance services to petrochemical complexes worldwide. Our portfolio, which includes technologies with alliance partners, offers polyethylene and acrylonitrile butadiene styrene polymer. We also provide integration expertise and other services for manufacturing plants that make solar-grade polysilicon. Through our Badger Licensing LLC joint venture with ExxonMobil, we offer ethylbenzene, styrene monomer, cumene, and bisphenol A. Badger’s latest addition to its technology portfolio is BenzOUT™, which reduces benzene in gasoline to meet current and future environmental regulations.

Although there has been significant production growth in commodity petrochemicals such as polyethylene and polypropylene during the past several years, mostly in the Middle East and China, the economic downturn has impacted demand and delayed plans for new facilities. As the economy recovers, we believe we will see growth in regions such as China, India, and Latin America, where new, integrated complexes are being planned, and the Middle East and Asia, where plans are under way to expand production of commodity petrochemicals.

Oil Refining. We provide technology, engineering, procurement, construction, and startup and commissioning services for projects ranging from grassroots designs to revamps of existing units. Services include technology licensing, front-end studies, front-end engineering and design (FEED), licensor integration, project management consultancy, detailed engineering, EPC, startup and commissioning.

Shaw’s Fluid Catalytic Cracking (FCC) technology, jointly licensed with an international partner, remains a key technology, stemming from its flexibility to handle a variety of feedstocks and its ability to significantly increase the production of gasoline and polymer-grade propylene. Whether applied in a grassroots unit or a revamp, our FCC technology can process low-quality feedstocks and add value by improving product yields, quality, and energy efficiency. We have completed approximately 50 grassroots licensed FCC units and many revamps that include modifications to our competitors’ technology designs. We also offer enhanced high-severity cracking technologies, including deep catalytic cracking and catalytic pyrolysis process, which maximize the production of propylene and ethylene.

We forecast growth in the refining sector, led by growth in the Middle East and Asia. New refineries are predicted to address domestic demand growth in other developing markets. Reconfiguration of U.S. and European refineries to produce cleaner fuels and meet environmental standards – along with the implementation of more complex refineries to process heavier, sour crude feedstocks – should create new opportunities for us.

Upstream. Our oil and gas capabilities include conceptual design, feasibility studies, technology development, FEED, detailed engineering and EPC. Project experience includes oil and gas facilities, gas transmission and storage, gas processing and synthesis gas (syngas).

Our upstream business has been successful in winning project management consultancy work and new contracts in the onshore and offshore sectors, as well as contracts in the alternate energy/clean technology sector, giving us the potential to establish our long-term competitive position in clean technologies.

Fabrication & Manufacturing (F&M) Segment

We believe our F&M segment is among the largest worldwide suppliers of fabricated piping systems. Demand for this segment’s products typically is driven by capital projects in industries that process fluids or gases such as the electric power, chemical, and refinery industries.

We seek to minimize the net working capital requirements of our F&M segment by contemporaneously invoicing clients when we purchase materials for our pipe, steel, and modular fabrication contracts. Our invoices generally do not include extended payment terms, nor do we offer significant rights of return. These contracts typically represent the majority of the business volume of our F&M segment.

The F&M segment supports both external clients and other Shaw business segments. For example, our F&M segment provides pipe and structural steel fabrication to the E&I segment for certain DOE work and for several Power segment projects. Additionally, the F&M segment’s newest U.S. facility assembles modules for the construction of nuclear power plants and can be used for offshore oil and gas related projects.

Pipe Fabrication. We fabricate fully integrated piping systems for heavy industrial clients around the world. We believe our expertise and proven capabilities in furnishing complete piping systems on a global scale has positioned us among the largest suppliers of fabricated piping systems for power generation facilities worldwide. Piping systems are normally on the critical path schedule for many heavy industrial plants. Large piping systems account for significant components within power generation, chemical, and other processing facilities.

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We fabricate complex piping systems using carbon steel, stainless, nickel, titanium, aluminum, and chrome moly pipe. We fabricate the pipe by cutting it to specified lengths; welding fittings, flanges or other components on the pipe; and/or bending the pipe to precise client specifications using our unique pipe-bending technology. We believe our Shaw Cojafex induction pipe-bending technology is the most advanced, sophisticated, and efficient pipe-bending technology of its kind. Using this technology, we bend carbon steel and alloy pipe for industrial, commercial, and architectural applications. Delivering piping systems that have been pre-fabricated to client specifications to a project site can provide significant savings in labor, time, and material costs as compared to field fabrication. Bent pipe also provides greater strength and production enhancements over piping systems with welding-in fittings and is a preferred method. Additionally, we have implemented a robotics welding program, as well as automated and semi-automated welding processes and production technology, that we believe results in increased productivity and quality.

We operate pipe fabrication facilities in Louisiana, Arkansas, South Carolina, Utah, Mexico, and Venezuela, as well as through joint ventures in Bahrain, Brazil, and a newly constructed facility in Abu Dhabi, United Arab Emirates. Our South Carolina facility is certified to fabricate pipe for nuclear power plants and maintains nuclear pipe American Society of Mechanical Engineers certification.

Through structural steel fabrication, we produce custom fabricated steel components and structures used in the architectural and industrial fields. These steel fabrications are used for supporting piping and equipment in buildings, chemical plants, refineries, and power generation facilities. Our fabrication lines use standard mill-produced steel shapes that are cut, drilled, punched, and welded into the specifications requested by our clients. We have structural steel fabrication operations in Louisiana and Mexico, offering the latest advanced and efficient technology for structural steel fabrication.

Manufacturing and Distribution. We operate pipe-fitting manufacturing facilities in Louisiana and New Jersey. Products from these facilities ultimately are sold to third-party operating plants and engineering and construction firms, as well as other business segments within our company. We maintain an inventory of pipe and pipe fittings, enabling us to realize greater efficiencies in the purchase of raw materials, overall lead times, and costs.

We operate distribution centers in Louisiana, Texas, Georgia, New Jersey, and Oklahoma to distribute our products and products manufactured by third parties.

Module Fabrication and Assembly. We began operations of our module fabrication and assembly facility in Lake Charles, Louisiana, in May 2010. This facility is believed to be the first of its kind in the U.S. and builds modules for the construction of nuclear power plants. It also has capabilities to build modules for petrochemical and chemical plants around the world. The facility uses our industry-leading technologies and our proprietary operations management systems. We have received orders for the first nuclear power plants to be built in the U.S. in more than 30 years, all of which will use AP1000 modular technology. The modules used in these nuclear power plants are being fabricated at the facility.

Investment in Westinghouse Segment

Our Investment in Westinghouse segment includes the 20 percent equity interest (Westinghouse Equity) in Westinghouse, held by Nuclear Energy Holdings, our wholly-owned special purpose subsidiary.  Westinghouse serves the domestic and international nuclear electric power industry by supplying advanced nuclear power plant designs, licensing, engineering services, equipment, fuel and a wide range of other products and services to owners and operators of nuclear power plants. We believe Westinghouse products and services are being used in approximately half of the world’s operating nuclear power plants, including 60 percent of those in the U.S. Internationally, Westinghouse technology is being used for five reactors under construction in South Korea, four reactors under construction in China and is under consideration for numerous new nuclear reactors in multiple countries.  In the U.S., Westinghouse technology is being used for two reactors under construction in Georgia, two in South Carolina and two in Florida. Please see our disclosures under Note 7 – Investment in Westinghouse and Related Agreements, Note 8 — Equity Method Investments and Variable Interest Entities and Note 10 — Debt and Revolving Lines of Credit and Liquidity below for additional information related to our Investment in Westinghouse Segment and circumstances in which NEH’s Westinghouse Equity may be re-purchased by Toshiba.

On September 6, 2011, NEH announced that it intends to exercise its put options to sell the Westinghouse Equity to Toshiba. The exercise of the Japanese yen-denominated put options prior to October 2012 requires the consent of the trustee acting on behalf of the bond holders of the yen-denominated bonds that were issued in connection with the funding of the acquisition of the Westinghouse Equity. If the necessary consents are obtained, NEH formally will notify Toshiba in accordance with the terms of the put options, and the Westinghouse Equity will transfer 90 days thereafter. The funds received must be applied toward the redemption of the bonds on the next scheduled interest payment date (March 15, 2012 or September 15, 2012). Under the terms of the put option agreements, if consent to redeem the bonds early is not granted, the put options will be exercised automatically on October 6, 2012, for cash settlement on January 4, 2013. Proceeds from the sale would be used to repay the bonds in full on their scheduled maturity date of March 15, 2013.

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The put options require Toshiba to purchase the Westinghouse Equity at a price equivalent to not less than 96.7 percent of the principal amount of the bonds. NEH will fund up to the 3.3 percent shortfall of the principal amount of the bonds, which was approximately $55.4 million at August 31, 2011. We may recognize a non-operating gain once the put options are settled resulting principally from foreign exchange movements. At August 31 exchange rates and assuming early exchange, the gain would have been approximately $541.0 million pre-tax. The actual gain or loss will be determined at settlement.  We can provide no assurance that the put option will be exercised prior to October 6, 2012.

Concurrent and in connection with NEH’s acquisition of the Westinghouse Equity, we executed with Toshiba a Westinghouse commercial relationship agreement, which provides us with certain exclusive opportunities relating to marketing, developing, engineering and constructing Westinghouse AP1000 nuclear power plants. Under the agreement, Shaw has the exclusive right to perform specific services and/or provide equipment for AP1000 units that Shaw and Toshiba mutually agree to pursue.  The specific services and equipment include, among other things, the right to provide:  (i) EPC services on future Westinghouse AP1000 nuclear power plants; (ii) piping for certain units; and (iii) selected modules for those units (Exclusive Services). Pursuant to the terms of the agreement, Toshiba will cause Westinghouse to promote Shaw as its provider of choice for the Exclusive Services. In addition, the agreement acknowledges that the parties intend for Westinghouse to treat us no less favorably than it treats Toshiba when evaluating client needs and/or demands. The exclusive right to provide the Exclusive Services is inapplicable if Westinghouse can demonstrate that Shaw does not meet certain conditions. Additionally, the agreement contemplates that Shaw and Westinghouse will work collaboratively to develop additional initiatives from the core competencies of both companies.

The Westinghouse CRA has a six year term expiring in 2013 and contains renewal provisions. As long as we maintain more than a 15 percent interest in Westinghouse, we maintain our exclusivity rights provided under the terms of the Westinghouse CRA. If NEH is successful in obtaining the consent of the trustee to exercise its put option to sell the Westinghouse Equity to Toshiba, the Westinghouse CRA will terminate upon the exercise of the put option. This agreement, accordingly, will likely terminate no later than October 6, 2012. For financial reporting purposes, we concluded at the time of signing the agreement that no value should be allocated to the Westinghouse CRA nor should it be recognized as a separate asset.

For additional information, see Note 8 — Equity Method Investments and Note 10 — Debt and Revolving Lines of Credit included in our consolidated financial statements beginning on page F-2.

Corporate Segment

Our Corporate segment includes our corporate management and expenses associated with managing our company as a whole. These expenses include compensation and benefits of corporate management and staff, legal and professional fees and administrative and general expenses that are not allocated to other segments. Our Corporate segment’s assets primarily include cash, cash equivalents and short-term investments held by the corporate entities, property and equipment related to our corporate headquarters and certain information technology assets.

Clients, Marketing and Seasonality

Our clients are principally regulated utilities, independent and merchant power producers, multinational and national oil companies and industrial corporations, and government agencies. See Note 16 — Business Segments included in Part II, Item 8 — Financial Statements and Supplementary Data for information regarding our client concentrations. Additionally, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Backlog for information regarding our backlog concentrations as of August 31, 2011.

We conduct our business development efforts principally with an in-house sales force. Additionally, we engage independent contractors to market to certain clients and geographic areas. We pay our sales force a base salary plus, when appropriate, an annual bonus that may consist of cash, stock options, restricted stock awards, stock, or any combination thereof. We pay our independent contractors on a commission basis that also may include a monthly retainer.

A portion of our business, primarily our nuclear and fossil power plant maintenance business, is seasonal, resulting in fluctuations in revenues and gross profit in our Plant Services segment during our fiscal year. Generally, spring and autumn are the peak periods for our Plant Services segment.

Competition

The industries we serve are highly competitive and, for the most part, require substantial resources and highly skilled and experienced technical personnel. A large number of regional, national, and international engineering and construction companies are competing in these industries, and certain competitors may have greater financial and other resources and more experience, industry knowledge, and client relationships.

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Companies that we compete with in our Power segment include Bechtel Corporation, Fluor Corporation, URS Corporation, Black & Veatch Corporation, Kiewit Corporation and Zachry Corporation. Companies that we compete with in our E&C segment include CB&I Lummus, KBR, Inc., Samsung, The Linde Group, and Technip. Companies that we compete with in our E&I segment include CH2M Hill, URS, Fluor, Jacobs Engineering Group, Inc., Bechtel, AECOM, and TetraTech, Inc. Companies that we compete with in our Plant Services segment include Fluor, Day & Zimmerman, Turner Industries, KBR, and Jacobs. Companies that we compete with in our F&M segment consist of a number of smaller pipe fabricators in the U.S., while internationally our principal competitors are divisions of large industrial firms. Companies that compete with our Investment in Westinghouse segment include Areva, General Electric (GE), Mitsubishi, Hitachi, and AtomStroyExport.

In addition, see Part I, Item 1A — Risk Factors for a discussion of the risks related to competition we face in each of our business segments.

Backlog of Unfilled Orders

Our backlog represents management’s estimate of future revenues expected to be realized from contracts awarded to us by clients.   Backlog is estimated using legally binding agreements for projects that management believes are likely to proceed.  Management evaluates the potential backlog value of each project awarded based upon the nature of the underlying contract, commitment and other factors, including the economic, financial, and regulatory viability of the project and the likelihood of the contract proceeding.  Projects in backlog may be increased or decreased for scope change and/or may be suspended or cancelled at any time by our clients.

The following table sets forth backlog by segment at August 31, 2011 and 2010 (in millions):

	August 31, 2011		August 31, 2010
Power	$	10,776.4	$	11,407.9
Plant Services		2,119.7		1,850.0
E&I		5,189.9		4,942.8
E&C		436.4		759.1
F&M		1,495.9		1,246.7
Total backlog	$	20,018.3	$	20,206.5

For additional information with respect to our backlog as of August 31, 2011 and 2010, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations. In addition, see Part I, Item 1A — Risk Factors for a discussion of risks related to our backlog.

Types of Contracts

Our work is performed under two general types of contracts: cost-reimbursable contracts and fixed-price contracts. Both types of contracts may be modified by cost escalation provisions or other risk-sharing mechanisms, and both may include incentive and penalty provisions. Each of our contracts may contain components of more than one of the contract types discussed below. For example, some of our contracts have elements of cost-reimbursable with a maximum target price, fixed-price subject to certain adjustments and fixed-price and cost-reimbursable provisions encompassed within one contract. During the term of a project, the contract or components of the contract may be renegotiated to include characteristics of a different contract type. We attempt to focus our EPC activities on a cost-reimbursable plus a fee or markup and negotiated fixed-price work, each as described in more detail below. We believe these types of contracts may help reduce our exposure to unanticipated and unrecoverable cost overruns. When we negotiate any type of contract, we frequently are required to accomplish the scope of work and meet certain performance criteria within a specified timeframe; otherwise, we could be assessed damages that, in many cases, are pre-agreed-upon liquidated damages. All contract types are subject to client-authorized amendment.

At August 31, 2011, approximately 50% of our backlog was comprised of cost-reimbursable contracts and 50% was comprised of fixed-price contracts. See Note 1 — Description of Business and Summary of Significant Accounting Policies for a discussion of the nature of our operations and types of contracts.

U.S. government contracts typically are awarded through competitive bidding or negotiations pursuant to federal acquisition regulations and may involve several bidders or offerors. Government contracts also typically have annual funding limitations, are limited by public sector budgeting constraints and may be terminated at the discretion of the government agency with payment only for work performed and commitments made at the time of termination. In the event of termination, we generally receive some allowance for profit on the work performed. Many of these contracts are multi-year indefinite delivery, indefinite quantity (IDIQ) agreements. These programs provide estimates of a maximum amount the agency expects to spend. Our program management and technical staffs work closely with the government agency to define the scope and amount of work required. Although these contracts initially do not provide us with a specific amount of work, as projects are defined, the work may be awarded to us without further competitive bidding. We generally include in our backlog an estimate of the work we expect to receive under these specific agreements.

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Although we generally serve as the prime contractor on our federal government contracts, or as part of a joint venture acting as the prime contractor, we also may serve as a subcontractor to other prime contractors. With respect to bidding on large, complex environmental contracts, we have entered into, and expect to continue to enter into, joint venture or teaming arrangements with competitors.

U.S. government contracts are subject to oversight audits by government representatives, profit and cost controls, and limitations and provisions permitting modification or termination, in whole or in part, without prior notice, at the government’s discretion. Government contracts are subject to specific procurement regulations and a variety of socio-economic and other requirements. Failure to comply with such regulations and requirements could lead to suspension or debarment, for cause, from future government contracting or subcontracting for a period of time. Some of the causes for debarment are violations of various statutes, including those related to employment practices, the protection of the environment, the accuracy of records and the recording of costs.

Our continuing service agreements with clients expedite individual project contract negotiations through means other than the formal bidding process. These agreements typically contain a standardized set of purchasing terms and pre-negotiated pricing provisions and often provide for periodic price adjustments. Service agreements allow our clients to achieve greater cost efficiencies and reduced cycle times in the design and fabrication of complex piping systems for power generation, chemical and refinery projects. Additionally, while these agreements do not typically contain committed volumes, we believe that these agreements provide us with a steady source of new projects and help minimize the impact of short-term pricing volatility and reduce our sales pursuit costs.

See Part I, Item 1A — Risk Factors for additional discussion of the risks related to contractual arrangements, including our contracts with the U.S. government.

Raw Materials and Suppliers

For our EPC services, we often rely on third-party equipment and raw materials manufacturers and subcontractors to complete our projects. We are not substantially dependent on any individual third party to support these operations; however, we are subject to possible cost escalations based on inflation, currency and other price fluctuations resulting from supply and demand imbalances. In the future, our mix of third-party suppliers will increase as our construction phase progresses on our major nuclear EPC contracts, and we may experience increased dependence on particular suppliers as a result.

Our principal raw materials for our pipe and steel fabrication operations are carbon steel, stainless and other alloy piping, which we obtain from a number of domestic and foreign steel producers. The market for most raw materials is extremely competitive, and certain types of raw materials are available from only one or a few specialized suppliers.

In addition to manufacturing our own pipe fittings, we purchase some of our pipe fittings from other manufacturers. These arrangements generally lower our pipe fabrication costs because we are often able to negotiate advantageous purchase prices as a result of the volume of our purchases. If a manufacturer is unable to deliver the materials according to the negotiated terms, we may be required to purchase the materials from another source (or manufacture our own pipe fittings) at a higher price. We keep certain items in stock at each of our facilities and transport items among our facilities as required. We obtain materials that are more specialized from suppliers when required for a project.

In addition, see Part I, Item 1A — Risk Factors for a discussion of our dependence on joint venture or consortium partners, subcontractors and equipment manufacturers.

Environmental Health & Safety (EHS)

We actively promote a positive and proactive attitude toward safety in accordance with all applicable and related laws. Our mission is to be the industry leader in environmental, health and safety performance and our pursuit of this mission is evidenced by our achievements in reaching safety milestones, winning safety awards and maintaining a low Occupational Safety and Health Administration (OSHA) case rate. We reached full commercial operation of a grassroots ethylene plant for Eastern Petrochemical Company (SHARQ) in Saudi Arabia without a lost-time incident. We strive for zero injuries, illnesses and environmental incidents on all of our job sites.

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Industry Certifications

In order to perform certain aspects of nuclear power plant construction, fabrication and installation activities of American Society of Mechanical Engineers (ASME) Section III Code items such as vessels, piping systems, supports and spent fuel canister/storage containments at nuclear plant sites, our domestic subsidiary engineering and construction operations maintain the required ASME certifications (N, N3, NPT, and NA stamps) (NS Cert). These ASME certifications also authorize us to serve as a material organization for the supply of ferrous and nonferrous material. We also maintain the National Board nuclear repair certification (NR stamp) for N and N3 stamped nuclear components.ASME NQA-1 is the NRC-endorsed industry standard that defines the Quality Assurance Program requirements for Nuclear Facility Applications. Our module fabrication and assembly facility in Lake Charles, Louisiana is a key contributor to the nuclear supply chain which commits to and complies with this standard.

In order to perform fabrication and repairs of coded piping systems, our domestic construction operations and fabrication facilities, as well as our subsidiaries in Derby, U.K.; Maracaibo, Venezuela; and Manama, Bahrain; maintain the ASME certification (U and PP stamps). The majority of our fabrication facilities, as well as our subsidiaries in Derby, U.K. and Manama, Bahrain; also have obtained the required ASME certification (S stamp) and the National Board certification (R stamp).

Our domestic subsidiary engineering and construction operations also maintain the required ASME certification (S stamp) and the National Board repair certification (R stamp), in addition to the ASME certifications (A, PP and U stamps) and the National Board registration certification (NB stamp) for S, A, PP and U stamped items.

Our Laurens, South Carolina, pipe fabrication facility also maintains a nuclear piping ASME certification (NPT stamp) and is authorized to fabricate piping for nuclear power plants and to serve as a material organization to manufacture and supply ferrous and nonferrous material. This facility also is registered by the International Organization of Standards (ISO 9001-2008). Substantially all of our North American engineering operations, as well as our U.K. and Middle East operations, are registered also by the International Organization of Standards (ISO 9001). This registration provides assurance to our clients that we have procedures to control quality in our fabrication processes.

Patents, Tradenames and Licenses and Other Intellectual Property

We consider our web-based earned value application, ShawTractm, to be proprietary assets. In addition, our E&C segment has developed or has the right to license leading process technologies, including technologies from third parties, used for the production of a variety of petrochemicals and chemicals. We have a leading position in technology associated with the design and construction of plants that produce ethylene, which we protect and develop with license restrictions and a research and development program. We believe our complete technology portfolio and experience in the commercial application of technologies and related know-how differentiates us from our competitors, enhances our margins and provides early involvement in projects that may utilize our broad range of engineering, procurement and construction capabilities. We also are developing and researching new technologies to complement and expand our offerings.

Through our IT Group acquisition in 2002 and the acquisition of Envirogen in 2003, we acquired certain patents and proprietary technologies that are useful in our environmental remediation business. The technologies include a number of processes for the treatment of soil and groundwater contaminated with a variety of compounds including organics, chlorinated organics, oxygenates and metals.

In addition, see Part I, Item 1A — Risk Factors for the impact of changes in technology or new technology developments by our competitors could have on us.

Environmental Matters

Our U.S. operations are subject to numerous laws and regulations at the federal, regional, state and local level relating to environmental protection and the safety and human health of personnel and the public. These laws and regulations apply to a broad range of our activities, including those concerning emissions, discharges into waterways, and generation, storage, handling, treatment and disposal of hazardous materials and wastes. Environmental protection laws and regulations generally require us to obtain and comply with a wide variety of environmental registrations, licenses, permits and other approvals. Failure to comply with these laws and regulations could result in, among other things,  the assessment of administrative, civil and/or criminal penalties, the imposition of remedial requirements and the issuance of orders limiting or enjoining some or all of our future operations.

Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and comparable state laws applicable to our domestic operations, we may be required to investigate and remediate hazardous substances and other regulated materials that have been released into the environment. CERCLA and comparable state laws impose strict and, under certain circumstances, joint and several liability for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise released, regardless of whether a company knew of or caused the disposal or release. Liable parties under CERCLA may be required to pay for the costs of remediating the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies. In addition, where contamination may be present, it is not uncommon for the neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs.   Our domestic operations generate solid wastes, including hazardous wastes that are subject to the requirements of the Resources Conservation and Recovery Act (RCRA) and comparable state laws. Failure by us to handle and dispose of solid and hazardous wastes in compliance with RCRA may result in the imposition of liability, including remedial obligations. We also could incur environmental liability at sites where we have been contractually hired by potentially responsible parties (PRPs) to remediate contamination of the site. Some PRPs have from time to time sought to expand the reach of CERCLA, RCRA and similar state statutes to make the remediation contractor responsible for site cleanup costs in certain circumstances. These PRPs have asserted that environmental contractors are owners or operators of hazardous waste facilities or that the contractors arranged for treatment, transportation or disposal of solid or hazardous wastes or hazardous substances. If we are held responsible under CERCLA or RCRA for damages caused while performing services or otherwise, we may be forced to incur cleanup costs and other costs directly, notwithstanding the potential availability of contribution or indemnification from other parties.

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The Federal Water Pollution Control Act, also known as the Clean Water Act, and applicable state laws impose restrictions and strict controls regarding the discharge of pollutants into state waters or waters of the United States. The discharge of pollutants into jurisdictional waters is prohibited unless permitted by the EPA or applicable state agencies.  In addition, the Oil Pollution Act of 1990 imposes a variety of requirements on responsible parties related to the prevention of oil spills and liability for damages, including natural resource damages, resulting from such spills in waters of the United States. A responsible party includes the owner or operator of a facility. The Clean Water Act and analogous state laws provide for administrative, civil and criminal penalties for unauthorized discharges and, together with the Oil Pollution Act of 1990, impose rigorous requirements for spill prevention and response planning, as well as substantial potential liability for the costs of removal, remediation, and damages in connection with any unauthorized discharges.

The Federal Clean Air Act and analogous state laws require permits for facilities that have the potential to emit substances into the atmosphere that could adversely affect environmental quality. Failure to obtain a permit or to comply with permit requirements could result in the imposition of substantial administrative, civil and even criminal penalties.  More stringent laws and regulations relating to climate change and greenhouse gases (GHGs) may be adopted in the future and could impact our business.   On December 15, 2009, the EPA published its findings that emissions of carbon dioxide, methane, and other GHGs  present an endangerment to public heath and the environment because emissions of such gases are, according to the EPA, contributing to the warming of the earth’s atmosphere and other climate changes.  Based on these findings, the EPA has begun adopting and implementing regulations to restrict emissions of GHGs under existing provisions of the Federal Clean Air Act. The EPA has adopted regulations that require a reduction in emissions of GHGs from motor vehicles and that regulates emissions of GHGs from certain stationary sources, effective January 2, 2011.  Also, the EPA has adopted rules requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, including petroleum refineries, on an annual basis, beginning in 2011 for emissions occurring in 2010, as well as offshore and onshore oil and natural gas production facilities and onshore processing, transmission, storage and distribution facilities on an annual basis beginning in 2012 for emission occurring in 2011. In addition, the United States Congress has from time to time considered adopting legislation to reduce emissions of GHGs and almost one-half of the states have already taken legal measures to reduce emissions of GHGs primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs. Most of these cap and trade programs work by requiring either major sources of emissions, such as electric power plants, or major producers of fuels such as refineries and gas processing plants, to acquire and surrender emission allowances. The number or allowances available for purchase is reduced each year in an effort to achieve the overall GHG emission reduction goal.

It is not possible to predict at this time whether these requirements or any regulations or legislation adopted in the future to control GHG emissions would have an overall negative or positive impact on our business.  If these requirements increase the cost of doing business for our clients and reduce the demand for our clients’ products, the demand for our services could be reduced.  Alternatively, these requirements could result in an increased demand for our services related to the reduction of GHG emissions.  Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms (including hurricanes), droughts, and floods, and other climatic events; if any such effects were to occur, they could have an adverse effect on our assets and operations.

Our operations outside of the U.S. are subject to similar foreign governmental controls and restrictions pertaining to protection of the environment and the safety and health of personnel and the public. For example, with respect to climate change, many foreign nations (but not the U.S.) have agreed to limit emissions for GHG pursuant to the United Nations Framework Convention on Climate Change, also known as the Kyoto Protocol. Failure to comply with foreign requirements, including the Kyoto Protocol, in areas outside of the U.S. where we conduct operations may lead to government sanctions resulting in penalties, remedial obligations and injunctive relief against future activities.

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The environmental, health and safety laws and regulations to which we are subject are changing constantly, and it is impossible to predict the effect of such laws and regulations on us in the future. We believe we are in substantial compliance with all applicable environmental, health and safety laws and regulations. To date, our costs net of any insurance proceeds with respect to environmental compliance have not been material, and to our knowledge, we have not incurred any material net environmental liability. However, we can provide no assurance that we will not incur material environmental costs or liabilities in the future. For additional information on how environmental matters may impact our business, see Part I, Item 1A — Risk Factors.

Employees

We employ approximately 27,000 people, including part-time and temporary workers. This total includes approximately 14,000 craft employees, 4,000 technical employees and 9,000 nontechnical administrative employees. Approximately 4,500 employees were represented by labor unions pursuant to collective bargaining agreements. We often employ union workers on a project-specific basis. We believe that current relationships with our employees (including those represented by unions) are satisfactory. We are not aware of any circumstances that are likely to result in a work stoppage at any of our facilities.

See Part I, Item 1A — Risk Factors for a discussion of the risks related to work stoppages and other labor issues.

Available Information

All of our periodic report filings with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are made available, free of charge, through our website located at http://www.shawgrp.com, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports. These reports are available through our website as soon as reasonably practicable after we electronically file with or furnish the reports to the SEC. Information on our website is not incorporated into this 2011 Form 10-K or our other securities filings. You may also request an electronic or paper copy of these filings at no cost by writing or telephoning us at the following: The Shaw Group Inc., Attention: Investor Relations Office, 4171 Essen Lane, Baton Rouge, Louisiana, 70809, (225) 932-2500. In addition, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, or on the SEC’s Internet website located at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room and the SEC’s Internet website by calling the SEC at 1-800-SEC-0330.

Certifications

We will timely provide the annual certification of our Chief Executive Officer to the NYSE. We filed last year’s certification on January 25, 2011. In addition, our Chief Executive Officer and Chief Financial Officer each have signed and filed the certifications under Section 302 of the Sarbanes-Oxley Act of 2002 with this Form 10-K.

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Item 1A.  Risk Factors

The risks described below could materially and adversely affect our stock price, business, financial condition and results of operations and the actual outcome of matters as to which forward-looking statements are made in this Form 10-K. The risk factors described below are not the only ones we face. Our stock price, business, financial condition and results of operations may also be affected by additional factors that are not currently known to us or that we currently consider immaterial or that are not specific to us, such as general economic conditions.

The categorization of risks set forth below is meant to help you better understand the risks facing our business and is not intended to limit consideration of the possible effects of these risks to the listed categories. Any adverse effects related to the risks discussed below may, and likely will, adversely affect many aspects of our business.

You should refer to the explanation of the qualifications and limitations on forward-looking statements under Cautionary Statement Regarding Forward-Looking Statements on page 1 in this Form 10-K.  All forward-looking statements made by us are qualified by the risk factors described below.

Risks Related to Our Operations

Demand for our products and services is cyclical and vulnerable to economic downturns and reductions in private industry and government spending and/or their ability to meet existing payment obligations. If general economic conditions continue to weaken or the credit markets deteriorate, we may be unable to recover expenditures, our revenues, and profits, and our financial condition may be negatively impacted.

The industries we serve historically have been, and will likely continue to be, cyclical in nature and vulnerable to general downturns in the domestic and international economies. Consequently, our results of operations have fluctuated and may continue to fluctuate depending on the demand for products and services from these industries.

Fluctuations in the economy can affect consumer’s demand for electricity and thus our clients’ capital spending priorities. Due to the current economic downturn, many of our clients may face budget shortfalls or may delay capital spending resulting in a decrease in the overall demand for our services. A decrease in federal, state and local tax revenue as well as other economic declines may result in lower government spending. Our clients may find it more difficult to raise capital in the future due to limitations on the availability of credit and other uncertainties in the credit markets. This reduction in spending could have a material adverse effect on our operations.

Our clients may demand better pricing terms and their ability to timely pay our invoices may be affected by an ongoing weak economy. Our business traditionally lags recovery in the economy; therefore, our business may not recover immediately upon any economic improvement. If the economy weakens further or government spending is reduced, then our revenues, net income and overall financial condition may deteriorate.  Further, in many instances during the course of a project, we commit and/or pay for products or expenses attributable to our clients with an understanding that the client will pay us per the terms of our commercial contract with them. Our clients may not be able to make such payments to us in a timely manner, or at all, in which case we could be forced to absorb these costs requiring that we commit our financial resources to projects prior to receiving payments from the client. If a client defaults in making its payments on a project in which we have devoted significant financial resources, it could have a material adverse effect on our business or results of operations.

We face substantial competition in each of our business segments.

We face competition from numerous regional, national and international competitors, some of which have greater financial and other resources than we do. Our competitors include well-established, well-financed businesses, both privately and publicly held, including many major energy equipment manufacturers and engineering and construction companies, some engineering companies, internal engineering departments at utilities and some of our clients. The award of many of our contracts is determined by competitive bid.  That competition can impact the margin we earn on our contracts or cause us not to win the award.  For a discussion of certain specific competitors as well as the impact of competition on our business, please see Management Discussion and Analysis of Financial Condition and Results of Operation.

Our results of operations depend on new contract awards; however, the selection process and timing for performing these contracts are not within our control.

A substantial portion of our revenues is directly or indirectly dependent on winning new contracts. We operate in highly competitive markets and it is difficult to predict whether and when we will be awarded new contracts due to a multiple of factors including: the lengthy and complex bidding and selection process, client capital investment decisions, market conditions, available financing, government approvals, permitting and environmental matters. Further, most of those same factors can delay or stop a project.  Consequently, we are subject to the risk of losing new awards to competitors and the risk a project may experience significant delay or cancellation – impacting our results of operations and cash flows which fluctuate from quarter to quarter depending on the timing and size of new contract awards.

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The March 2011 earthquake and tsunami that struck Japan caused significant damage to power and transportation infrastructure, including several nuclear reactors. As events at the Japanese nuclear facilities continue to develop, potential risks associated with nuclear power production could slow the pace of global licensing and construction of new or planned nuclear power facilities or negatively impact existing facilities’ efforts to extend their operating licenses.

Shaw currently has nuclear construction projects in the U.S. and China, material amounts of which are included in our backlog. While our clients have indicated they intend to move forward with these units, domestic utility companies’ intentions could be challenged if Congress implements a moratorium on building nuclear reactors or the NRC slows the permitting process or adds additional permitting requirements. The Chinese government suspended approval of new nuclear projects and will conduct safety inspections of all plants under construction, but emphasized that China’s long-term nuclear development plans have not changed. Other governments have announced plans to review and/or delay decisions to review new nuclear projects. Demand for nuclear power could be negatively affected by such action. Because several of our segments deal with nuclear power either directly or indirectly, this could have a material adverse effect on our operations. Further, if current contracts included in our backlog are significantly delayed, modified or canceled, our future revenues and earnings may be materially and adversely impacted.

While many of the contracts in our backlog provide for cancellation fees in the event clients cancel projects, these cancellation fees usually provide for reimbursement of our out-of-pocket costs, revenues for work performed prior to cancellation and a varying percentage of the profits we would have realized had the contract been completed. However, upon cancellation we typically have no contractual right to the total revenues reflected in our backlog for that particular contract.

We provide maintenance services for approximately one third of existing U.S. nuclear plants and perform uprates at existing facilities.  Should any of our customers fail to extend existing operating licenses, demand for those services may be negatively affected.

Shaw and our customers may have ordered critical components for on-going projects (whether nuclear or non-nuclear) from Japanese and global suppliers. Due to the severe damage to Japan’s infrastructure and many of its industrial facilities, and the impact of such damage on the global supply chain, delivery of such critical components could be significantly delayed; potentially delaying such projects, which could increase costs, and possibly  subject us to liquidated damages. Many of our contracts include a force majeure provision excusing any potential delay resulting from a natural disaster or “Act of God,” and we cannot guarantee the force majeure provisions under these contracts would provide us relief.

The Investment in Westinghouse segment could be materially and adversely affected by the events in Japan to the extent demand diminishes for Westinghouse’s nuclear products, including its AP1000 technology.  Toshiba, a Japanese company, is the majority owner of Westinghouse.  On September 6, 2011, NEH announced its intention to exercise the put option to sell the Westinghouse Equity back to Toshiba. The Westinghouse CRA will terminate upon the exercise of the put option and we can provide no assurance as to our ability to attract or retain additional work from Toshiba. See “Risks related to our Investment in Westinghouse could have an adverse effect on us.”

Our backlog of unfilled orders is subject to unexpected adjustments and cancellations and is, therefore, not a reliable indicator of our future revenues or earnings.

At August 31, 2011, our backlog was approximately $20.0 billion. Our backlog consists of projects for which we have legally binding contracts or commitments from clients, including legally binding agreements without defined scope. Commitments may be in the form of written contracts for specific projects, purchase orders or indications of the amounts of time and materials we need to make available for clients’ anticipated projects. Our backlog includes expected revenue based on engineering and design specifications that may not be final and could be revised over time and for government and maintenance contracts that may not specify actual dollar amounts for the work to be performed. For these contracts, we calculate our backlog of estimated work to be performed, based on our knowledge of our clients’ stated intentions or our historic experience.  Projects may remain in our backlog for extended periods of time.

There can be no assurance we will realize revenues projected in our backlog or, if realized, such revenues will result in profits. Due to project terminations, suspensions and/or changes in project scope and schedule, we cannot predict with certainty when or if our backlog will be performed. Material delays, cancellations or payment defaults could materially affect our balance sheet, results of operations and cash flow and may reduce the value of our stock. For example, during the fiscal quarter ended May 31, 2009, we received notice from our client of a significant delay in the construction schedule for two new AP1000 nuclear reactors to be located in Florida. Our client advised us that activities for the project would be slowed considerably until the combined operating license (COL) is issued by the NRC for the plant which we understand, if the license schedule remains on schedule, will occur in late 2012. As a result, the proposed first reactor is now expected to enter service in 2021, with the second anticipated 18 months later.

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Client cancellations could reduce our backlog, which, among other things, could materially impact the revenues and earnings. Many of the contracts in our backlog provide for cancellation fees in the event clients cancel projects. These cancellation fees usually provide for reimbursement of our out-of-pocket costs, revenues for work performed prior to cancellation and a varying percentage of the profits we would have realized had the contract been completed. However, upon cancellation we typically have no contractual right to the total revenues reflected in our backlog for that particular contract.

The nature of our contracts, particularly our reimbursable and fixed-price contracts, could adversely affect us.

Approximately 50% of our backlog at August 31, 2011, was from cost-reimbursable contracts and the remaining 50% was from contracts that are primarily fixed-price. Revenues and gross profit from both cost-reimbursable and fixed-price contracts can be significantly affected by contract incentives/penalties that may not be known or finalized until the later stages of the contract term. We enter into contractual agreements with clients for some of our EPC services to be performed based on agreed-upon reimbursable costs and labor rates. Some of these contracts provide for the client’s review of our accounting and cost control systems to verify the completeness and accuracy of the reimbursable costs invoiced. These reviews could result in reductions in reimbursable costs and labor rates previously billed to the client.  

Under certain hybrid contracts such as reimbursable contracts containing a target price, we agree to the contract price of the project at the time we enter into the contract. While we benefit from costs savings and earnings from approved change orders under target-priced contracts, we are generally unable to recover all cost overruns to the approved contract price. Under certain reimbursable target price contracts, we share with the client any savings up to a negotiated or target ceiling. When costs exceed the negotiated ceiling price, we may be required to reduce our fee or to absorb some or all of the cost overruns.

We also assume the risks related to revenue, cost and gross profit realized on fixed-priced contracts that can vary, sometimes substantially, from the original projections due to changes in a variety of other factors that include, but are not limited to:

· engineering design changes;

· unanticipated technical problems with the equipment being supplied or developed by us, which may require that we spend our own money to remedy the problem;

· changes in the cost of equipment, commodities, materials or labor;

· difficulties in obtaining required permits or approvals;

· changes in laws and regulations;

· changes in labor conditions, including the availability and productivity of labor;

· project modifications creating unanticipated costs;

· delays caused by local weather conditions;

· failure to perform by our project owners, suppliers or subcontractors; and

· general economic conditions.

These risks may be exacerbated by the length of time between signing a contract and completing the project because most fixed-price contracts are long-term. The term of our contracts can be as long as approximately seven years. Long-term, fixed-price contracts are inherently risky and often make us subject to penalties if portions of the project are not completed in accordance with agreed-upon time limits. Therefore, significant losses can result from performing large, long-term projects on a fixed-price basis. These losses may be material, including, in some cases, up to or exceeding the full contract value in certain events of non-performance, and could negatively impact our business, financial condition, results of operations and cash flows.

Many of our client contracts require us to satisfy specified design or EPC milestones in order to receive payment for the work completed or equipment or supplies procured prior to achievement of the applicable milestone. As a result, under these types of arrangements, we may incur significant costs or perform significant amounts of services prior to receipt of payment. If the client determines not to proceed with the completion of the project or if the client defaults on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts previously expended to purchase equipment or supplies. In addition, many of our clients for large EPC projects are project-specific entities that do not have significant assets other than their interests in the EPC project. It may be difficult for us to collect amounts owed to us by these clients. If we are unable to collect amounts owed to us for these matters, we may be required to record a charge against earnings related to the project, which could result in a material loss.

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Our failure to meet contractual schedule or performance requirements could adversely affect our revenue and profitability.

In certain circumstances, we guarantee project completion by a scheduled date or certain performance testing levels. Failure to meet these schedule or performance requirements could result in a reduction of revenues and/or additional costs, and these adjustments could exceed projected profits. A project’s revenues could also be reduced by liquidated damages withheld by clients under contractual penalty provisions, which can be substantial and can accrue on a daily basis. Our costs generally increase from schedule delays and/or could exceed our projections for a particular project. Performance problems for existing and future contracts could cause actual results of operations to differ materially from those anticipated by us and could cause us to suffer damage to our reputation within our industry and our client base. For examples of the kinds of claims that may result from liquidated damages provisions and cost overruns, see Note 20 — Accounting for Claims, Unapproved Change Orders and Incentives on Long-Term Construction Contracts included in our consolidated financial statements beginning on page F-2.

If our joint venture or consortium partners, subcontractors or equipment manufacturers fail to perform their contractual obligations on a project, we could be exposed to the risk of loss, and in some cases, joint and several liability to our clients, loss of reputation and additional financial performance obligations that could result in reduced profits or, in some cases, significant losses.

We often enter into consortium arrangements and joint ventures as part of our Power segment, E&C segment and E&I segment contracts in order to jointly bid and perform a particular project. The success of these consortium agreements and joint ventures depends, in large part, on the satisfactory performance of the contractual obligations by our partners. If our partners do not meet their obligations, the consortium or joint venture may be unable to adequately perform and deliver its contracted services. Under these circumstances, we may be required to incur additional costs, make additional investments and provide additional services to ensure the adequate performance and delivery of the contracted services and/or to pay liquidated damages.  Under agreements with joint and several liability, we could be liable for both our obligations and those of our partners. These additional obligations could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture, which could also negatively affect our reputation in the industries we serve. Additionally, we rely on third party partners, equipment manufacturers and third party subcontractors to complete our projects. To the extent our partners cannot execute their portion of the work, are unable to deliver their services, equipment or materials according to the negotiated terms and/or we cannot engage subcontractors or acquire equipment or materials, our ability to complete a project in a timely fashion or at a profit may be impaired. If the amount we are required to pay for these goods and services in an effort to meet our contractual obligations exceeds the amount we have estimated in bidding for fixed-price work, we could experience losses in the performance of these contracts.

If we are unable to form teaming arrangements, particularly for some of our international opportunities, our ability to compete for and win business may be negatively impacted.

In both the private and public sectors, either acting as a prime contractor, a subcontractor or as a member of consortium, we may join with other firms to form a team to compete for a single contract. Because a team can often offer stronger combined qualifications than any firm standing alone, these teaming arrangements can be very important to the success of a particular contract bid process or proposal. This can be particularly true in international operations in which bidding success can be substantially impacted by the presence and /or quality of the local partner.  The failure to maintain such relationships in both foreign and domestic markets may impact our ability to win work.

Our government contracts may present risks to us.

We are a major provider of services to U.S. government agencies and therefore are exposed to risks associated with government contracting. Government clients typically can terminate or modify contracts with us at their convenience. As a result, our backlog may be reduced or we may incur a loss if a government agency decides to terminate or modify a contract with us. We are also subject to audits, including audits of our internal controls systems, cost reviews and investigations by government contracting oversight agencies. During the course of an audit, the oversight agency may disallow costs. Cost disallowances may result in adjustments to previously reported revenues and may require refunding previously collected cash proceeds. In addition, our failure to comply with the terms of one or more of our government contracts or government regulations and statutes could result in our being suspended or barred from future government projects for a significant period of time, possible civil or criminal fines and penalties and the risk of public scrutiny of our performance, and potential harm to our reputation, each of which could have a material adverse effect on our business. Other remedies that our government clients may seek for improper activities or performance issues include sanctions such as forfeiture of profits and suspension of payments.

Our government contracts present us with other risks as well. Legislatures typically appropriate funds on a year-by-year basis, while contract performance may take more than one year. As a result, our contracts with government agencies may be only partially funded or may be terminated, and we may not realize all of our potential revenues and profits from those contracts. Appropriations and the timing of payment may be influenced by, among other things, the state of the economy, competing political priorities, curtailments in the use of government contracting firms, budget constraints, the timing and amount of tax receipts and the overall level of government expenditures.

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For the fiscal year ended August 31, 2011, 92.0% of our E&I segment’s backlog was with U.S. government agencies of which $1.2 billion was funded and $3.6 billion was unfunded.

The limitation or the modification of the Price-Anderson Act’s indemnification authority and similar federal programs for nuclear and other potentially hazardous activities, could adversely affect our business.

The Price-Anderson Act (PAA) comprehensively regulates the manufacture, use and storage of radioactive materials, while promoting the nuclear energy industry by offering indemnification to  the nuclear industry against liability arising from nuclear incidents in the U.S. for non-military facilities for incidents in connection with contractual activity for DOE, while still ensuring compensation for the general public. The Energy Policy Act of 2005 extended the period of coverage to include all nuclear power reactors issued construction permits through December 31, 2025.  Because we provide services to the DOE at nuclear weapons facilities and the nuclear energy industry in the ongoing maintenance and modification, as well as decontamination and decommissioning, of its nuclear energy plants, we are entitled to the indemnification protections under the PAA. Although the PAA’s indemnification provisions are broad, it does not apply to all liabilities that we might incur while performing services as a radioactive materials cleanup contractor for DOE and the nuclear energy industry.

Public Law 85-804 (PL 85-804) which indemnifies government contractors who conduct certain approved contractual activity related to unusually hazardous or nuclear activity, may provide additional or alternative indemnification for such activities.  If the contractor protection currently provided by the PAA or PL 85-804 is significantly modified, is not approved for, or does not extend to all of our services, our business could be adversely affected by either our clients’ refusal  to retain us for potentially covered projects or our inability to obtain commercially adequate insurance and indemnification.

If the U.S. were to change its support of nuclear power or revoke or limit DOE’s Loan Guarantee Program (LGP), it could have a material adverse effect on our operations.

The U.S. government has been supportive of increased investment in nuclear power. However, if the U.S. government changed its policy or public acceptance of nuclear technology as a means of generating electricity significantly wanes, demand for nuclear power could be negatively affected and potentially increase the regulation of the nuclear power industry. Because several of our segments deal with nuclear power either directly or indirectly, this could have a material adverse effect on our operations.

Some of our clients may rely on DOE’s LGP, under which DOE issues loan guarantees to eligible projects that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases” and “employ new or significantly improved technologies as compared to technologies in service in the U.S. at the time the guarantee is issued.” If the current administration were to revoke or limit DOE’s LGP, it could make obtaining funding more difficult for many of our clients which could inhibit their ability to take on new projects resulting in a negative impact on our future operations.

We may be exposed to additional risks in our Power segment, as we begin to execute our significant nuclear backlog and book new nuclear awards. These risks include greater backlog concentration in fewer projects, possibly increasing requirements for letters of credit and potential cost overruns which could have a material adverse effect on our future revenues and liquidity.Additionally, the current economic conditions may impact the pace of the development of nuclear projects.

We expect to convert a significant part of our backlog of nuclear projects in the Power segment into revenues in the future. Nuclear projects may  utilize larger sums of working capital than other projects in this segment and will be concentrated among a few larger clients. As we increase our active projects in the nuclear business, and consequently our reliance in revenues from this business, we may become more dependent on a smaller number of clients. If we lose clients in our nuclear business and are unable to replace them, our revenues could be materially adversely impacted. Additionally, if any of the nuclear projects currently included in our backlog are significantly delayed, modified or canceled, our reported backlog and future earnings may be materially and adversely impacted.

As we convert our nuclear projects from backlog into active construction we may face significantly greater requirements for the provision of letters of credit or other forms of credit enhancements. Together with the construction costs for nuclear plants, which are significantly higher than those for coal- or gas-fired plants, we may be required to significantly expand our access to capital and credit. We can provide no assurance that we will be able to access such capital and credit as needed or that we would be able to do so on economically attractive terms. Finally, the significant expense associated with nuclear projects, weak global economic conditions and other competitive factors, including less expensive alternative energies like natural gas, may result in additional delays for currently expected projects or slower demand for nuclear energy projects over time.

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Environmental laws and regulations expose us to certain risks, could increase our costs and liabilities and impact demand for our services.  While all of our operations are impacted by environmental laws and regulations, these impacts may be most significant for our nuclear and integrated environmental solutions businesses.

General

Our operations are subject to environmental laws and regulations, including those concerning:

· emissions into the air;

· climate change legislation and regulatory initiatives;

· discharges into waterways;

· generation, storage, handling, treatment, transport and disposal of waste materials and hazardous substances; and

· human health and safety.

Our projects often involve highly regulated materials, including hazardous and nuclear materials and wastes. Environmental laws and regulations generally impose limitations and standards relating to the use, handling, transport, discharge or disposal of regulated materials and require us to obtain a permit and comply with various other requirements. The improper characterization, use, handling, discharge or disposal of regulated materials or any other failure to comply with federal, regional, state and local environmental laws and regulations or associated environmental permits may result in the assessment of administrative, civil and criminal penalties, the imposition of investigatory or remedial obligations or the issuance of injunctions that could restrict or prevent our ability to perform some or all of our activities under existing contracts. The risks associated with these activities are most significant within our E&I segment, which, in addition to environmental remediation activities, has two subsidiaries (The LandBank Group Inc. and Shaw Environmental Liability Solutions LLC) that previously purchased and/or assumed liability with respect to properties that have experienced environmental damage. We can provide no assurance that our insurance coverage or other loss remediation strategies will insulate us from any material liability associated with these operations.

     In addition to existing environmental regulations, the adoption and implementation of regulations imposing reporting obligations on, or limiting emissions of greenhouse gases from, our clients’ equipment and operations could significantly impact demand for our services, particularly among our clients for coal and gas-fired generation facilities as well as our clients in the petrochemicals business. Any significant reduction in demand for our services as a result of the adoption of these or similar proposals could have a significant adverse impact on our results of operations.

Nuclear Operations

Risks associated with nuclear projects, due to their size and complexity, may be increased by permit, licensing and regulatory approvals that can be even more stringent and time consuming than similar processes for more conventional construction projects. We are subject to regulations from a number of entities, including the Nuclear Regulatory Commission (NRC), International Atomic Energy Agency (IAEA) and the European Union (EU), which have a substantial effect on our nuclear operations.  An example of the way these regulatory entities impact our business is the NRC’s certification process for the AP1000 design.  The NRC notified Westinghouse that the proposed AP1000 shield building design will require modification before it will certify the AP1000 design.  The IAEA and the EU both have systems for nuclear material safeguards.  Global-scale agreements on nuclear safety such as the Convention on Nuclear Safety and the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management are also in place.  The Euratom Treaty has created uniform safety standards aimed at protecting the public and workers and passed rules governing the transportation of radioactive waste.  In addition, licensed nuclear facilities must comply with strict inspection procedures. Regulations governing the shutdown and dismantling of nuclear facilities and the disposal of nuclear wastes could also have an effect on our operations. Delays in receiving necessary approvals, permits or licenses, failure to maintain sufficient compliance programs, or other problems encountered during construction could significantly increase our costs and cause our actual results of operations to significantly differ from anticipated results.

Unanticipated litigation or negative developments in pending litigation related to hazardous substances encountered in our businesses could have a material adverse effect on our results of operations and financial condition.

We are from time to time involved in various litigation and other matters related to hazardous substances encountered in our businesses.  In particular, the numerous operating hazards inherent in our businesses increase the risk of toxic tort litigation relating to any and all consequences arising out of human exposure to hazardous substances, including without limitation, current or past claims involving asbestos related materials, formaldehyde, Cesium 137 (radiation), mercury and other hazardous substances, or related environmental damage. As a result, we are subject to potentially material liabilities related to personal injuries or property damages that may be caused by hazardous substance releases and exposures. The outcome of such litigation is inherently uncertain and adverse developments or outcomes can result in significant monetary damages, penalties or injunctive relief against us, limitations on our property rights, or regulatory interpretations that increase our operating costs. If any of these disputes results in a substantial monetary judgment against us or an adverse legal interpretation is settled on unfavorable terms, or otherwise affects our operations, it could have a material adverse effect on our operating results and financial condition.

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Our clients’ and our partners’ ability to receive the applicable regulatory and environmental approvals for our projects and the timeliness of those approvals could adversely affect us.

The regulatory permitting process for many of the projects performed by our Power segment requires significant investments of time and money by our clients and sometimes by us and/or our partners. There are no assurances that we or our clients will obtain the necessary permits for these projects. Applications for permits to operate these fossil and nuclear-fueled facilities, including air emissions permits, may be opposed by government entities, individuals or environmental groups, resulting in delays and possible non-issuance of the permits. For example, the NRC’s notice to WEC directing WEC to modify the AP1000 shield building, may cause a delay resulting in a schedule modification.  While we believe Westinghouse will be able to satisfy the NRC’s concerns and receive design certification, this or similar certification actions could affect or delay our ability to complete our projects. Additionally, we have been advised that activities for a proposed AP1000 nuclear reactor to be built in Florida will be slowed considerably  until a COL is issued by the NRC for the plant. We understand that the issuance of the COL may be delayed until late 2012 and, as a result, the first reactor is not expected to enter service until the 2021 timeframe, with the second anticipated 18 months later.

Due to the international nature of our business we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act,  similar worldwide anti-bribery laws, and various international trade and export laws.

The international nature of our business creates various domestic and local regulatory challenges.  The U.S. Foreign Corrupt Practices Act (FCPA) and similar anti-bribery laws in other jurisdictions generally prohibit U.S. based companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that experience government corruption to some degree, and, in certain circumstances, compliance with anti-bribery laws may conflict with those local customs and practices. Our FCPA policy and training provide our employees with procedures, guidelines and information about FCPA obligations and compliance. Further, we advise our partners, subcontractors, agents and others who work for us or on our behalf that they are obligated to comply with the FCPA. We have procedures and controls in place designed to ensure internal and external compliance. Additionally, our global operations require us to import and export goods and technologies across international borders, which requires a robust compliance program. However, such internal controls and procedures will not always protect us from reckless or criminal acts committed by our employees or agents. If we are found to be liable for FCPA or other regulatory violations (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we could suffer from criminal or civil penalties or other sanctions, which could have a material adverse effect on our business.

Political and economic conditions in foreign countries in which we operate could adversely affect us.

Approximately 15% of our fiscal year 2011 revenues were attributable to projects in international markets, some of which are subject to political unrest and uncertainty. In addition to the specific challenges we face internationally, international contracts, operations and expansion expose us to risks inherent in doing business outside the U.S., including:

· uncertain economic conditions in the foreign countries in which we make capital investments, operate and sell products and services;

· the lack of well-developed legal systems and less established or traditional business practices in some countries in which we operate and sell products and services, which could make it difficult for us to enforce our contractual rights;

· security and safety of employees and subcontractors;

· expropriation of property;

· restrictions on the right to convert or repatriate currency;

· changes in labor conditions;

· changing general economic and political conditions in foreign markets;

· terrorist attacks;

· commodity prices and availability;

· potential incompatibility with foreign joint venture partners; and

· interruptions or delays in international shipping.

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Foreign exchange risks may affect our ability to realize a profit from certain projects or to obtain projects.

We generally attempt to denominate our contracts in USD or in the currencies of our expenditures. However, we do enter into contracts that subject us to foreign exchange risks, particularly to the extent contract revenues are denominated in a currency different than the contract costs. We attempt to minimize our exposure from foreign exchange risks by obtaining escalation provisions for projects in inflationary economies, or entering into hedge contracts when there are different currencies for contract revenues and costs. However, these actions may not always eliminate all foreign exchange risks.

Our Westinghouse Bonds are JPY denominated. As the USD/JPY exchange rate changes, the amount of USD required to service this debt will change.

Risks related to our Investment in Westinghouse could have an adverse effect on us.

We incur significant JPY-denominated cash interest cost on the Westinghouse Bonds issued to finance our Investment in Westinghouse, and we can provide no assurance that we will receive dividends from Westinghouse sufficient to cover these costs. In an effort to mitigate this risk, we enter into foreign currency forward contracts from time-to-time, to hedge the impact of exchange rate changes on our JPY-denominated cash interest payments on the Westinghouse Bonds. We normally focus our hedge transactions to the JPY interest payments due within the following twelve months.

In connection with our Investment in Westinghouse and issuing the Westinghouse Bonds, we entered into put option agreements with Toshiba providing us the option to sell all or part of our Westinghouse Equity to Toshiba during a defined exercise period, which we are currently within.  On September 6, 2011, NEH announced that it intends to exercise its put options to sell the Westinghouse Equity to Toshiba. The exercise of the Japanese yen-denominated put options prior to October 2012 requires the consent of the trustee acting on behalf of the bond holders of the yen-denominated bonds that were issued in connection with the funding of the acquisition of the Westinghouse Equity. If the necessary consents are obtained, NEH formally will notify Toshiba in accordance with the terms of the put option agreements, and Westinghouse Equity will transfer 90 days thereafter. The funds received must be applied toward the redemption of the bonds on the next scheduled interest payment date. Under the terms of the put option agreements, if consent to redeem the bonds early is not granted, the put options will be exercised automatically on October 6, 2012, for cash settlement on January 4, 2013. Proceeds from the sale would be used to repay the bonds in full on their scheduled maturity date of March 15, 2013.

We can provide no assurance that the put options will be exercised prior to October 6, 2012 resulting from NEH’s expected request to bond holders’ trustee. However, as previously disclosed, the Westinghouse bond holders have the ability to cause us to put our Westinghouse Equity back to Toshiba as a result of the occurrence of a “Toshiba Event” as defined under the Indenture.  Should the bondholders exercise this right, the put may occur prior to October 6, 2012.

For additional information, see Investment in Westinghouse Segment in Our Business Segments above, Note 7 – Investment in Westinghouse and Related Agreements, Note 8 — Equity Method Investments and Variable Interest Entities and Note 10 — Debt and Revolving Lines of Credit included in our consolidated financial statements beginning on page F-2 and in Liquidity below.

The nature of our projects exposes us to potential professional liability, product liability, warranty and other claims, which may reduce our profits.

We engineer, construct and perform services including pipe and steel fabrication in large industrial facilities where accidents or system failures can have significant consequences. Any such accident or failure at a site where we provided EPC or similar services could result in significant professional liability, product liability, warranty and other claims against us, regardless of whether our products or services caused the incident. Further, the engineering and construction projects we perform expose us to additional risks including, but not limited to, equipment failures, personal injuries, property damage, shortages of materials and labor, permitting delays, work stoppages, labor disputes, weather problems and unforeseen engineering, architectural, environmental and geological problems, each of which could significantly impact our performance and materially impact our financial statements.

Additionally, once our construction is complete, we may face claims relating to our job performance, which could materially impact our financial statements. Under some of our contracts, we must use client specified metals or processes for producing or fabricating pipe for our clients. The failure of any of these metals or processes could result in warranty claims against us for significant replacement or reworking costs, which could materially impact our financial statements.

We have been and may in the future be named as a defendant in legal proceedings where parties may make a claim for damages or other remedies with respect to our projects or other matters. Should we be determined liable, we may not be covered by insurance or, if covered, the dollar amount of these liabilities may exceed our policy limits. Our professional liability coverage is on a claims-made basis covering only claims actually made during the policy period currently in effect. Even where insurance is maintained for such exposures, the policies have deductibles resulting in our assuming exposure for a layer of coverage with respect to any such claims. Any damages not covered by our insurance, in excess of our insurance limits or, if covered by insurance subject to a high deductible, could result in a significant loss for us, which may reduce our profits and cash available for operations.

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Risks Related to Financial Reporting and Corporate Governance

Actual results could differ from the estimates and assumptions that we use to prepare our financial statements.

To prepare financial statements in conformity with U.S. generally accepted accounting principles (GAAP), our management is required to make estimates and assumptions, as of the date of the financial statements, that affect the reported values of assets and liabilities and revenues and expenses and disclosures of contingent assets and liabilities. Areas requiring significant estimates by our management include, among other things:

· contract costs and profits and application of the percentage-of-completion method of accounting; revenues recognized, and reduction of costs recognized, as a result of contract claims and unapproved change orders;

· revenues recognized related to project incentives we expect to earn;

· recoverability of inventory and application of lower of cost or market accounting;

· provisions for uncollectible receivables and client claims and recoveries of costs from subcontractors, vendors and others;

· provisions for income taxes and related valuation allowances;

· recoverability of goodwill;

· recoverability of other intangibles and related estimated lives;

· valuation of assets acquired and liabilities assumed in connection with business combinations;

· valuation of defined benefit pension plans; and

· accruals for estimated assets and liabilities, including litigation and insurance recoveries/reserves.

Under our accounting policies, we measure and recognize a large portion of our profits and revenue under the percentage-of-completion accounting methodology. This methodology allows us to recognize revenue and profits ratably over the life of a contract by comparing the amount of the cost incurred to date against the total amount of cost estimated to be incurred.  Our actual results could differ materially from our estimates. Changes in reported amounts,  the effects of those changes and changes in estimates may be recorded in future periods.

If we were required to write down all or part of our goodwill and/or our intangible assets, our net earnings and net worth could be materially adversely affected.

We had $545.8 million of goodwill and $17.1 million of intangible assets recorded on our consolidated balance sheet at August 31, 2011. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. If our market capitalization drops significantly below the amount of net equity recorded on our balance sheet, it might indicate a decline in our fair value and would require us to further evaluate whether our goodwill has been impaired. We also perform an annual review of our goodwill and intangible assets to determine if it has become impaired which would require us to write down the impaired portion of these assets. If we were required to write down all or a significant part of our goodwill and/or intangible assets, our net earnings and net worth could be materially adversely affected.

We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.

The efficient operation of our business is dependent on computer hardware and software systems. Information systems are vulnerable to security breaches by computer hackers and cyber terrorists. We rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. In addition, the unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased performance and increased overhead costs, causing our business and results of operations to suffer. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business and results of operations.

We have certain provisions in our articles of incorporation and by-laws that may discourage a change of control of our company.

Certain of our corporate governing documents contain provisions that could make it more difficult for a third-party to acquire us without the consent of our board of directors. For example, certain provisions in our articles of incorporation authorize the board of directors to determine the powers, preferences and rights of preference shares and to issue preference shares without shareholder approval. These provisions could make it more difficult for a third-party to acquire us, even if the third-party’s offer may be considered beneficial by many shareholders.

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Other provisions require a supermajority vote.  For example, the affirmative vote of the holders of at least seventy-five percent (75%) of the outstanding shares of common stock entitled to vote on a matter (not including shares deemed beneficially owned by a related person) is required to authorize and/or approve a merger, consolidation or business combination.

This supermajority vote requirement could make it difficult to complete a merger, consolidation or sale of our company.  The Articles further provide that to change this supermajority requirement would itself require an affirmative vote of the holders of at least seventy-five (75%) of the voting power of common stock.

Any one of the provisions discussed above could discourage third parties from obtaining control of us. These provisions may also impede a transaction in which our shareholders could receive a premium over then-current market price and our shareholders’ ability to approve transactions that they consider in their best interests.

Risks Related to Our Liquidity and Capital Resources

Non-compliance with covenants in our restated credit agreement (Facility), without waiver or amendment from the lenders, could require us to post cash collateral for outstanding letters of credit and could adversely affect our ability to borrow under the Facility.

Our Facility contains certain financial covenants, including a leverage ratio and an interest coverage ratio, which limit the amounts we may borrow. In addition, we are required to file our quarterly and annual reports with the SEC on a timely basis. The defined terms used in calculating the financial covenants require us to follow GAAP, which requires the use of judgments and estimates. We may not be able to satisfy these ratios, especially if our operating results deteriorate as a result of, but not limited to, the impact of other risk factors that may have a negative impact on our future earnings. Additionally, we may not be able to file our SEC reports on a timely basis.

A breach of any covenant or our inability to comply with the required financial ratios could result in a default under our Facility, and we can provide no assurance that we will be able to obtain the necessary waivers or amendments from our lenders to remedy a default. In the event of any default not waived, the lenders under our Facility are not required to lend any additional amounts or issue letters of credit and could elect to require us to apply all of our available cash to collateralize any outstanding letters of credit, declare any outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable or require us to apply all of our available cash to repay any borrowings then outstanding at the time of default. If we are unable to pay when due any material indebtness, to fund adequately the Facility letter of credit collateral account or if any other default has occurred and is continuing under our restated credit agreement, our lenders could proceed to accelerate all of our obligations and we could be required to pay immediately any shortfall amount required to cover our obligations into the Facility letter of credit collateral account.  If any future indebtedness under our Facility is accelerated, we can provide no assurance that our assets would be sufficient to repay such indebtedness in full. At August 31, 2011, we had no outstanding borrowings under the Facility with outstanding letters of credit inclusive of both financial and performance of approximately $207.0 million. Our borrowing capacity under the Facility is reduced by the aggregate amount of letters of credit we have outstanding.

Further, we have entered into indemnity agreements with our sureties that contain cross-default provisions. Accordingly, in the event of a default under our Facility, we would need to obtain a waiver from our sureties or an amendment to our indemnity agreements. We can provide no assurance that we would be successful in obtaining an amendment or waiver.

Downgrades by rating agencies, inability to obtain adequate surety bonding or letters of credit could affect our business strategies by requiring us to modify existing bonding facilities and/or reduce our ability to bid on new work which could have a material adverse effect on our future revenues and business prospects.

In certain circumstances, clients may require us to provide credit enhancements, including bonds or letters of credit. In line with industry practice, we are often required to provide performance and surety bonds to clients. These bonds and letters of credit provide credit support for the client if we fail to perform our obligations under the contract. If security is required for a particular project and we are unable to obtain a bond or letter of credit on terms commercially acceptable to us, we cannot pursue that project. We have letter of credit and bonding facilities but, as is typically the case, the issuance of bonds under our surety facilities is at the surety’s sole discretion.

In the event our debt ratings are lowered by independent rating agencies such as Moody’s Investors Service or Standard & Poor’s (S&P), it could be more difficult for us to obtain surety bonding for new projects in the future, and we may be required to increase or provide additional cash collateral to obtain these surety bonds, which would reduce our available cash and could impact our ability to renew or increase availability under our Facility. Any new or modified bonding facilities might not be on terms as favorable as those we have currently, and we could also be subject to increased costs of capital and interest rates.

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We continue to expand our business in areas where the underlying contract must be bonded, especially in government services in which bonding is predominately provided by insurance sureties. These surety bonds indemnify the client if we fail to perform our obligations under the contract. Failure to provide a bond on terms required by a client may result in an inability to compete for or win a project. Historically, we have had a strong surety bonding capacity but, as is typically the case, bonding is at the surety’s sole discretion. In addition, because of a reduction in overall worldwide bonding capacity, we may find it difficult to find sureties who will provide the contract-required bonding. Moreover, these contracts are often very large and extremely complex, which often necessitates the use of a joint venture, often with a competitor, to bid on and perform these types of contracts, especially since it may be easier to jointly pursue the necessary bonding. However, entering into these types of joint ventures or partnerships exposes us to the credit and performance risks of third parties, many of whom are not as financially strong as us.

Restrictive covenants in our Facility may restrict our ability to pursue our business strategies.

Our Facility limits our ability to, among other things:

· incur indebtedness or contingent obligations;

· issue preferred stock;

· pay dividends or make distributions to our shareholders;

· repurchase or redeem our capital stock or subordinated indebtedness;

· make investments;

· create liens;

· enter into sale/leaseback transactions;

· incur restrictions on the ability of our subsidiaries to pay dividends or to make other payments to us;

· enter into transactions with our shareholders and affiliates;

· sell and pledge assets; and

· acquire the assets of, or merge or consolidate with, other companies or transfer all or substantially all of our assets.

These covenants may also impair our ability to engage in favorable business activities and our ability to finance future operations or capital needs in furtherance of our business strategies. Moreover, the form or level of our indebtedness may prevent us from raising additional capital on attractive terms or obtaining additional financing if needed.

A breach of any of these covenants could result in an event of default under our Facility. For additional information, see Non-compliance with covenants in our Facility, without waiver or amendment from the lenders, could adversely affect our ability to borrow under the Facility above.

Because of the capital-intensive nature of our business, we are vulnerable to significant fluctuations in our liquidity that may vary substantially over time.

Our operations could require us to utilize large sums of working capital, sometimes on short notice and sometimes without assurance of recovery of the expenditures. Circumstances or events that could create large cash outflows include losses resulting from fixed-price contracts, environmental liabilities, litigation risks, unexpected costs or losses resulting from acquisitions, contract initiation or completion delays, political conditions, client payment problems, foreign exchange risks and professional and product liability claims.

Our borrowing levels and debt service obligations could adversely affect our financial condition and impair our ability to fulfill our obligations under our Facility.

At August 31, 2011, we had total outstanding indebtedness of approximately $1,680.8 million, approximately $1,679.8 million of which relates to our Westinghouse Bonds and is of limited recourse to us. In addition, at August 31, 2011, letters of credit, domestic and foreign, issued for our account in an aggregate amount of $456.1 million were outstanding and we had no borrowings under our Facility. Our indebtedness could have important consequences, including the following:

· requiring us to dedicate a substantial portion of our cash flows from operations to the repayment of debt, which reduces the cash available for other business purposes;

· limiting our ability to obtain additional financing and creating additional liens on our assets;

· limiting our flexibility in planning for, and reacting to, changes in our business;

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· placing us at a competitive disadvantage if we are more leveraged than our competitors;

· making us more vulnerable to adverse economic and industry conditions; and

· restricting us from making additional investments or acquisitions by limiting our aggregate debt obligations.

To the extent that new debt is incurred in addition to our current debt levels, the leverage risks described above would increase.

Risks Related to Labor and Employment

Our failure to attract and retain qualified personnel, including engineers, skilled workers and key officers, could have an adverse effect on us.

Our ability to attract and retain qualified professional and/or skilled personnel in accordance with our needs, either through direct hiring or acquisition of other firms employing such professionals, is an important factor in determining our future success. The market for these professionals is competitive, and there can be no assurance that we will be successful in our efforts to attract and retain needed personnel. Our ability to successfully execute our business strategy depends, in part, on our ability to attract and retain skilled laborers and craftsmen in our pipe fabrication and construction businesses. Demand for these workers can at times be high and the supply extremely limited. Our success is also highly dependent upon the continued services of our key officers, and we do not maintain key employee insurance on any of our executive officers.

If we are unable to retain qualified personnel, the roles and responsibilities of those employees will need to be filled, which may require that we devote time and resources to identifying, hiring and integrating new employees. In addition, the failure to attract and retain key employees, including officers, could impair our ability to provide services to our clients and conduct our business effectively.

Work stoppages, Union negotiations and other labor problems could adversely affect us.

At August 31, 2011, approximately 17% of our employees were represented by labor unions. A lengthy strike or other work stoppage at any of our facilities could have a material adverse effect on us. There is inherent risk that  on-going or future negotiations relating to collective bargaining agreements or union representation may not be favorable to us.  From time to time, we have also experienced attempts to unionize our non-union shops. Such efforts can often disrupt or delay work and present risk of labor unrest.

We may be required to contribute cash to meet our underfunded pension obligations in certain multi-employer pension plans.

Domestically, we participate in various multi-employer pension plans under union and industry wide agreements that, generally, provide defined benefits to employees covered by collective bargaining agreements. Absent an applicable exemption, a contributor to a multiemployer plan is liable, upon termination or withdrawal from a plan, for its proportionate share of the plan’s underfunded vested liability. Funding requirements for benefit obligations of our pension plans are subject to certain regulatory requirements and we may be required to make cash contributions which may be material to one or more of these plans to satisfy certain underfunded benefit obligations.

Our employees work on projects that are inherently dangerous and a failure to maintain a safe work site could result in significant losses.

Safety is a primary focus of our business and is critical to our reputation, however we often work on large-scale and complex projects, frequently in geographically remote locations. Our project sites can place our employees and others near large equipment, dangerous processes or highly regulated materials, and in challenging environments. Often, we are responsible for safety on the project sites where we work. Many of our clients require that we meet certain safety criteria to be eligible to bid on contracts, and some of our contract fees or profits are subject to satisfying safety criteria. Unsafe work conditions also have the potential of increasing employee turnover, increasing project costs and raising our operating costs. If we fail to implement appropriate safety procedures and/or if our procedures fail, our employees or others may suffer injuries. Although we maintain functional groups whose primary purpose is to implement effective health, safety and environmental procedures throughout our company, the failure to comply with such procedures, client contracts or applicable regulations could subject us to losses and liability.

Other Risk Factors

Lawsuits and regulatory proceedings could adversely affect our business.

From time to time, we, our directors and/or certain of our current and former officers are named as a party to lawsuits and regulatory proceedings. A discussion of our material lawsuits appears in Note 15 — Contingencies and Commitments included in our consolidated financial statements beginning on page F-2. Although it is not possible at this time to predict the likely outcome of these actions, an adverse result in any of these lawsuits could have a material adverse effect on us.

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Litigation can involve complex factual and legal questions and its outcome is uncertain. Any claim that is successfully asserted against us could result in significant damage claims and other losses. Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which could adversely affect our financial condition, results of operations or cash flows. For additional information, see Note 15 — Contingencies and Commitments and Note 20 — Accounting for Claims, Unapproved Change Orders and Incentives on Long-Term Construction Contracts included in our consolidated financial statements beginning on page F-2.

If we are unable to enforce our intellectual property rights or if our technology becomes obsolete, our competitive position could be adversely impacted.

We believe that we are an industry leader by owning or having access to our technologies. We protect our technology positions through patent registrations, license restrictions and a research and development program. We may not be able to successfully preserve our intellectual property rights in the future, and these rights could be invalidated, circumvented or challenged. In addition, the laws of some foreign countries in which our services may be sold do not protect intellectual property rights to the same extent as U.S. law. Because we license technologies from third parties, there is a risk that our relationships with licensors may terminate or expire or may be interrupted or harmed. If we are unable to protect and maintain our intellectual property rights, or if there are any successful intellectual property challenges or infringement proceedings against us, our ability to differentiate our service offerings could be reduced.

Additionally, if our technologies become obsolete, we may not be able to differentiate our service offerings, and some of our competitors may be able to offer more attractive services to our clients. For example, we believe that Westinghouse’s AP1000 technology is a leading technology for nuclear power generation plants. However, there are competing technologies, and it is likely that new technologies will be developed in the future. We also believe that our induction pipe bending technology, know-how and capabilities favorably influence our ability to compete successfully. Currently, this technology and our proprietary software are not patented. Even though we have some legal protections against the dissemination of this technology, including non-disclosure and confidentiality agreements, our efforts to prevent others from using our technology could be time-consuming, expensive and ultimately may be unsuccessful or only partially successful.

Finally, there is nothing to prevent our competitors from independently attempting to develop or obtain access to technologies that are similar or superior to our technology.

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Item 1B.  Unresolved Staff Comments.

None.

Item 2.  Properties.

At August 31, 2011, our principal properties (those where we occupy over 35,000 square feet) were as follows:

Location	Description	Segment Using Property	Owned Leased
Baton Rouge, LA	Corporate Headquarters	Corporate	Leased
Abu Dhabi, UAE	Office Building and Pipe Fabrication Facility	F&M	Leased
Addis, LA	Fabrication Facility	F&M	Owned
Askar, Bahrain	Office Building and Pipe Fabrication Facility	F&M	Leased
Baton Rouge, LA	Office Building	Corporate	Leased
Cambridge, MA	Office Building	E&C	Leased
Centennial, CO	Office Building	Power	Leased
Charlotte, NC	Office Buildings	Power	Leased
Clearfield, UT	Fabrication and Manufacturing	F&M	Leased
Concord, CA	Office Building	E&I	Leased
Delcambre, LA	Manufacturing Facility	Plant Services	Owned
Denver, CO	Office Building	E&I	Leased
Derby, United Kingdom	Manufacturing Facility	Power	Owned
El Dorado, AR	Manufacturing Facility	F&M	Owned
Findlay, OH	Office Building & Storage	E&I	Leased
Houston, TX	Office Building	E&C	Leased
Houston, TX	Office Building	Power/E&I	Leased
Houston, TX	Pipe Fittings Distribution Facility	F&M	Leased
Knoxville, TN	Warehouse	E&I	Leased
Knoxville, TN	Office Building	E&I	Leased
Lake Charles, LA	Module Assembly Facility	F&M	Leased
LaPorte, TX	Manufacturing Facility	Plant Services	Owned
Laurens, SC	Pipe Fabrication Facility	F&M	Owned
Maracaibo, Venezuela	Pipe Fabrication Facility	F&M	Owned
Matamoros, Mexico	Pipe Fabrication Facility	F&M	Owned
Milton Keynes, United Kingdom	Office Building	E&C	Leased
Mississauga, Canada	Office Building	E&C	Leased
Monroeville, PA	Office Building & Storage	E&I	Leased
Moorestown, NJ	Office Building	Power	Leased
New Brunswick, NJ	Manufacturing Facility	F&M	Leased
Prairieville, LA	Office Building/Manufacturing Facility	E&I/Power/Plant Services	Owned
Shreveport, LA	Manufacturing Facility	F&M	Owned
Shreveport, LA	Piping Components & Manufacturing Facility	F&M	Owned
Stoughton, MA	Office Building	E&I/Power	Leased
Trenton, NJ	Office Building	E&I	Leased
Tulsa, OK	Pipe Fabrication & Distribution Facility	F&M	Owned
Walker, LA	Office Building & Warehouse	F&M	Owned
Walker, LA	Pipe Fabrication Facility	F&M	Owned
West Monroe, LA	Pipe Fabrication Facility	F&M	Owned

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In addition to these locations, we occupy other owned and leased facilities in various cities that are not considered principal properties. Portions of certain office buildings described above are currently being subleased for various terms. We consider each of our current facilities to be in good operating condition and adequate for its present use. We believe that our leases are at competitive market rates and do not anticipate any difficulty in leasing suitable additional space upon expiration of any lease.

Item 3.  Legal Proceedings

For a description of our material pending legal and regulatory proceedings and settlements, see Note 15 — Contingencies and Commitments to our consolidated financial statement beginning on page F-2.

PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock, no par value, is traded on the NYSE under the symbol “SHAW.” The following table sets forth, for the quarterly periods indicated, the high and low sale prices per share for the common stock as reported by the NYSE for our two most recent fiscal years and for the current fiscal year to date.

	High	Low
Fiscal Year ended August 31, 2011
First Quarter	35.29	29.56
Second Quarter	41.58	32.43
Third Quarter	41.62	27.61
Fourth Quarter	36.53	20.24
Fiscal Year ended August 31, 2010
First Quarter	33.63	24.50
Second Quarter	35.97	27.85
Third Quarter	40.49	30.78
Fourth Quarter	38.07	30.52

The closing sales price of our common stock on October 26, 2011, as reported on the NYSE, was $20.94 per share. On October 26, 2011, we had 246 shareholders of record.

We have not paid any cash dividends on the common stock. The declaration of dividends is at the discretion of our Board of Directors, and our dividend policy is reviewed by the Board of Directors on a regular basis. We are, however, subject to certain limitations on the payment of dividends under the terms of existing Credit Facilities. For additional information on these prohibitions, see our discussion of Liquidity and Capital Resources included in Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations below.

Issuer Purchases of Equity Securities

The following table provides information about our purchases during the quarter ended August 31, 2011 of our equity securities that are registered pursuant to Section 12 of the Exchange Act:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program		Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Program
6/1/2011 to 6/30/2011		—	$	—		—	$	500,000
7/1/2011 to 7/31/2011		—		—		—		500,000
8/1/2011 to 8/31/2011		945,260		23.01		945,100		478,232
Total		945,260	$	23.01		945,100

Equity Compensation Plan Information

For important information regarding our equity compensation plans, please see Note 13 – Share-Based Compensation in the Notes to the consolidated financial statements accompanying this Form 10-K.

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Stock Performance Graph

The following graph compares the cumulative 5-year total return to shareholders of our common stock relative to the cumulative total returns of the S&P 500 index (S&P 500) and the Dow Jones US Heavy Construction index (DJ Heavy Construction). An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and the S&P 500 and DJ Heavy Construction indexes on August 31, 2005 and its relative performance is tracked through August 31, 2011.

This stock performance information is furnished and shall not be deemed to be soliciting material or subject to Rule 14A, shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report and irrespective of any general incorporation by reference language in any such filing, except to the extent that we specifically incorporate the information by reference.

	8/06	8/07	8/08	8/09	8/10	8/11
Shaw Group Inc. (The)	100.00	198.93	196.90	116.57	128.78	92.65
S&P 500	100.00	115.14	102.31	83.63	87.74	103.97
Dow Jones US Heavy Construction	100.00	167.17	161.90	108.55	96.19	112.31

THE FOREGOING GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.

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See Part III, Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters with respect to information to be incorporated by reference regarding our equity compensation plans.

Item 6.  Selected Financial Data

The following selected financial data was derived from our audited consolidated financial statements. You should read the selected financial data presented below in conjunction with the information contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and the notes thereto beginning on page F-2 of this Form 10-K.

	Year Ended August 31,
(In millions, except per share amounts)	2011			2010		2009		2008		2007
Consolidated Statements of Operations
Revenues	$	5,937.7		$	6,984.0	$	7,276.3	$	6,998.0	$	5,723.7
Net income (loss) attributable to Shaw	$	(175.0	)	$	82.0	$	12.8	$	140.7	$	(19.0	)
Diluted net income (loss) per common share attributable to Shaw	$	(2.18	)	$	0.96	$	0.15	$	1.67	$	(0.24	)
Consolidated Balance Sheets
Total assets	$	5,487.0		$	5,996.3	$	5,557.2	$	4,587.3	$	3,894.4
Westinghouse bonds, short-term	$	1,679.8		$	1,520.7	$	1,388.0	$	—	$	—
Long-term debt, less current maturities	$	0.6		$	1.0	$	7.6	$	1,165.6	$	1,096.8
Cash dividends declared per common share	$	—		$	—	$	—	$	—	$	—

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis of our financial condition and results of operations should be read in conjunction with Part I of this Form 10-K as well as our consolidated financial statements and the notes thereto beginning on page F-2. The following analysis contains forward-looking statements about our future revenues, operating results and expectations. See Cautionary Statement Regarding Forward-Looking Statements and Part I, Item 1A — Risk Factors for a discussion of the risks, assumptions and uncertainties affecting these statements.

Overview of Results and Outlook

Our financial results for fiscal year 2011 were adversely impacted by several significant events that occurred during the year. In the first quarter, a split jury verdict on a project related dispute resulted in a charge of $63.4 million pre-tax ($38.7 million after tax) in our Power Segment; in the third quarter, and subsequent to the earthquakes and tsunami in Fukushima, Japan, we recorded an impairment of $48.1 million ($29.4 million after tax) on loans made to a project developer on a proposed nuclear power project in Texas under our agreement with Toshiba to jointly work on ABWR technology based projects; during the year we recorded write downs amounting to $183.7 million pre-tax ($118.1 after tax) resulting primarily from cost increases and schedule delays on a major ethylene project being executed by our E&C segment in Asia; in the fourth quarter we reversed approximately $71.9 million pretax ($44.2 million after tax) in contract profit on an EPC coal project in the U.S. for cost increases from quantity growth and resultant construction labor cost increases; and the rise of the Japanese Yen versus the U.S. Dollar resulted in a $159.0 million pre-tax ($97.8 after tax) in non-cash foreign exchange translation losses on the JPY denominated Westinghouse Bonds. These events overshadowed the strong operational performance in our E&I, Plant Services, and F&M operating segments. Cash flow from operations amounted to $120.5 million and backlog of unfilled orders remained strong at $20.0 billion.

In addition to the impact from the adverse jury verdict noted above, our Power segment’s financial results reflect decreased activity in our coal and air quality control projects as several reached substantial completion in fiscal year 2010. Partially offsetting this decrease is increased activity on our domestic AP1000 nuclear power projects as well as continued execution of EPC projects for three coal-fired and three gas-fired power plants, one of which was completed during 2011. The segment’s results also benefited from power uprate and lifecycle extension projects at existing nuclear facilities and a $23 million pre-tax favorable arbitration settlement in Taiwan. This segment’s backlog of unfilled orders remains strong at approximately $10.8 billion.

Our Plant Services segment achieved an increase in revenues and a significant increase in profit as well as income (loss) before income taxes and earnings (losses) from unconsolidated entities of $59.8 million and record EBITDA of $61.6 million in fiscal year 2011. The segment benefited from a greater number and longer duration of fueling outages at U.S. nuclear power plants for new and existing clients. This segment continues to successfully book new work and had its backlog of unfilled orders increase $269.7 million, or 14.6%, to $2.1 billion during fiscal year 2011.

Our E&I segment performed well during 2011 but generated less revenue and earnings compared to fiscal year 2010, primarily driven by decreased activity on our hurricane protection project in Louisiana as work nears completion.  This decrease was partially offset by our long-term MOX project for the DOE in South Carolina. E&I’s backlog of unfilled orders remained strong at approximately $5.2 billion.

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Our E&C segment experienced reduced revenues and generated a significant operating loss in fiscal year 2011, primarily from forecasted cost increases on a major international project noted above and from a decline in new awards. E&C’s backlog of unfilled orders declined $322.7 million, or 42.5%, to $436.4 million during fiscal year 2011. We are in the process of evaluating strategic alternatives for our E&C business. We have received a number of indications of interest from potential acquirers and are exploring  our options relating to this business. We can provide no assurance whether a transaction with our E&C business might be consummated or on what terms, such a transaction would significantly impact our financial position.

Similarly, our F&M segment experienced reduced revenues and operating profits in fiscal year 2011. The decrease is primarily due to a decline in new awards during fiscal years 2011 and 2010 originating from the oil refining and petrochemical industries, and from an approximate $16.8 million pre-tax adverse settlement of a dispute with a client. The decline in new orders is expected to be largely offset in the future by increases in work performed at the new modular assembly facility relating to the nuclear power plants our Power segment is executing in Georgia and South Carolina and from revenues to come from the pipe fabrication facility currently under construction in the UAE. F&M’s backlog of unfilled orders increased $249.2 million, or 20.0%, during 2011 to $1.5 billion.

The financial results of our Investment in Westinghouse segment continue to be negatively impacted by significant non-operating foreign exchange translation losses on our JPY-denominated Westinghouse Bonds. The translation loss occurs when the JPY appreciates against the USD. In fiscal years 2011 and 2010, we recorded pre-tax losses of $159.0 million and $131.6 million, respectively, related to foreign currency translation losses on the JPY-denominated bonds. The exchange rate of the JPY to the U.S. Dollar at August 31, 2011 was 76.8 as compared to 84.8 as of August 31, 2010.

On September 6, 2011, our wholly-owned subsidiary Nuclear Energy Holdings announced its intention to seek the consent of the trustee acting on behalf of the holders of the yen-denominated Westinghouse Bonds to exercise the put options it received in connection with its 2006 acquisition of 20 percent of the shares of the Westinghouse Group. If the necessary consents are obtained, Nuclear Energy Holdings formally will notify Toshiba in accordance with the terms of the put options, and the shares will transfer 90 days thereafter. The funds received must be applied toward the redemption of the bonds on the next scheduled interest payment date. If consents to redeem the bonds early are not granted, the put options will be exercised automatically on October 6, 2012, for cash settlement on January 4, 2013. Proceeds from the sale must be used to repay the bonds on their scheduled maturity date of March 15, 2013.The exercise of the put option will result in the termination of our CRA with WEC. While we believe we have developed a strong working relationship with WEC and its majority parent, Toshiba, we can provide no assurance as to the level of work we will conduct with WEC and/or Toshiba following the exercise of the put options.

Consolidated Results of Operations

The information below is an analysis of our consolidated results for the fiscal years ended August 31, 2011, 2010 and 2009 (in millions, except for percentages).  See Segment Results of Operations below for additional information describing the performance of each of our reportable segments.

Revenue:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	5,937.7		$	6,984.0		$	7,276.3
$ change from prior period		(1,046.3	)		(292.3	)
% change from prior period		(15.0	)%		(4.0	)%

The decrease in consolidated revenues during fiscal year 2011 was primarily due to declines in activity in our E&C ($504.5 million) and E&I ($320.9 million) segments. The decline in E&C revenues was driven by the continued lack of new awards in 2010 and 2011. The decline in E&I revenues is primarily attributed to decreased cost reimbursable construction activity on a hurricane protection project in Louisiana that is nearing completion.

Gross profit:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	196.3		$	569.2		$	604.0
$ change from prior period		(372.9	)		(34.8	)
% change from prior period		(65.5	)%		(5.8	)%

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Consolidated gross profit decreased during fiscal year 2011 as compared to fiscal year 2010 primarily due to reduced volumes of revenue as well as the $183.7 million in reduced margins related to forecasted cost increases to complete a major international project in our E&C segment and reversed contract profit on an EPC coal project in the U.S. for cost increases from quantity growth and resultant construction labor cost of approximately $86.8 million.

Selling, general and administrative expenses (SG&A):

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	273.5		$	288.0		$	308.7
$ change from prior period		(14.5	)		(20.7	)
% change from prior period		(5.0	)%		(6.7	)%

Consolidated SG&A decreased in fiscal year 2011 as compared to fiscal year 2010 primarily due to reductions in staffing costs.

Impairment of note receivable:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	48.1		$	—		$	—
$ change from prior period		48.1			—
% change from prior period		100.0	%		(0	)%

During the first quarter of fiscal year 2011, in connection with a global alliance with Toshiba, Shaw committed to fund $250.0 million in support of ABWR nuclear power related projects. The first $100.0 million was made available as a secured credit facility to the entity developing ABWR nuclear power plant reactors for the South Texas Projects 3 and 4. At May 31, 2011 and subsequent to the earthquakes and tsunami in Fukushima, Japan, we had advanced approximately $48.1 million under this credit facility. During the three months ended May 31, 2011, the project sponsor asked that we cease the majority of the work relating to individual orders issued under our EPC contract jointly obtained with Toshiba. Additionally, the project sponsors’ majority owner announced it was withdrawing from further financial participation in that company, and a major municipal utility announced it would indefinitely suspend all discussions regarding a potential agreement to purchase the power from the proposed facilities. Due to these changes, we reviewed the security supporting the loans outstanding (primarily partially manufactured equipment) and we wrote-off loans granted to the project entities totaling $48.1 million. We do not plan to make additional investments in ABWR related projects.

Interest expense:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	47.1		$	43.9		$	73.6
$ change from prior period		3.2			(29.7	)
% change from prior period		7.3	%		(40.4	)%

Consolidated interest expense increased in fiscal year 2011 as compared to fiscal year 2010 due primarily to the interest expense associated with the JPY denominated bonds, which increased, when expressed in U.S. dollar terms, by approximately $3.5 million, or 9.2%, to $41.6 million in fiscal year 2011 from $38.1 million in fiscal year 2010.The actual interest expense is paid in a fixed amount of JPY but the US dollar equivalent varies according to the JPY/US dollar exchange rate.

(Benefit) provision for income taxes:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	(106.8	)	$	38.0		$	10.7
$ change from prior period		(144.8	)		27.3
% change from prior period		(381.1	)%		255.1	%

Consolidated effective tax rate for fiscal year 2011 was a benefit of 36% as compared to a provision of 29% for fiscal year 2010. The change in our effective tax rate was primarily due the level and mix of earnings between our domestic and international operations.  See Note 11 – Income Taxes to our consolidated financial statements for a reconciliation of the federal statutory rate to the consolidated effective tax rate.

Earnings (losses) from unconsolidated entities:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	26.3		$	7.1		$	11.0
$ change from prior period		19.2			(3.9	)
% change from prior period		270.4	%		(35.5	)%

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Earnings from unconsolidated entities increased in fiscal year 2011 as compared to fiscal year 2010 primarily due to a $13.9 million net of tax increase in earnings from our Investment in Westinghouse.

Net income (loss)attributable to Shaw:

	For the Year Ended August 31,
	2011			2010			2009
Amount (in millions)	$	(175.0	)	$	82.0		$	12.8
$ change from prior period		(257.0	)		69.2
% change from prior period		(313.4	)%		540.6	%

The decrease in consolidated net income (loss) attributable to Shaw in fiscal year 2011 as compared to fiscal year 2010 was related to the factors discussed above and an increase in the pre-tax non-cash foreign currency translation loss on the Westinghouse Bonds of $27.4 million in fiscal year 2011.

Segment Results of Operations

The following tables compare selected summary financial information related to our segments for the fiscal years ended August 31, 2011, 2010, and 2009 (in millions, except for percentages):

	Fiscal Year Ended August 31,
	2011			2010			2009
Revenues:
Power	$	2,116.8		$	2,297.9		$	2,581.2
Plant Services		924.7			881.0			864.1
E&I		1,894.3			2,215.2			1,835.5
E&C		593.3			1,097.8			1,368.1
F&M		408.6			492.0			623.4
Corporate		—			0.1			4.0
Total revenues	$	5,937.7		$	6,984.0		$	7,276.3
Gross profit:
Power	$	35.8		$	119.7		$	87.0
Plant Services		70.2			53.2			17.8
E&I		188.8			206.8			161.7
E&C		(153.3	)		93.9			195.3
F&M		50.7			93.5			138.0
Corporate		4.1			2.1			4.2
Total gross profit	$	196.3		$	569.2		$	604.0
Gross profit percentage:
Power		1.7	%		5.2	%		3.4	%
Plant Services		7.6			6.0			2.1
E&I		10.0			9.3			8.8
E&C		(25.8	)		8.6			14.3
F&M		12.4			19.0			22.1
Corporate	NM			NM			NM
Total gross profit percentage		3.3	%		8.2	%		8.3	%
Selling, general and administrative expenses:
Power	$	41.2		$	51.8		$	55.8
Plant Services		10.6			9.8			12.3
E&I		74.4			71.3			66.6
E&C		47.9			50.0			50.8
F&M		30.6			30.1			31.7
Investment in Westinghouse		1.4			0.1			0.2
Corporate		67.4			74.9			91.3
Total selling, general and administrative expenses	$	273.5		$	288.0		$	308.7
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:
Power	$	1.8		$	64.9		$	29.3
Plant Services		59.8			43.7			6.7
E&I		117.3			138.8			91.0
E&C		(190.3	)		47.7			149.6
F&M		20.6			63.9			106.6
Investment in Westinghouse		(201.9	)		(169.8	)		(267.0	)
Corporate		(108.2	)		(58.1	)		(87.0	)
Total income (loss) before income taxes and earnings (losses) from unconsolidated entities	$	(300.9	)	$	131.1		$	29.2

NM — Not meaningful.

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Our revenues by industry were as follows (in millions, except for percentages):

	Fiscal Year Ended August 31,
	2011				2010				2009
	Amount		%		Amount		%		Amount		%
Environmental and Infrastructure	$	1,894.3		32	$	2,215.2		32	$	1,835.5		25
Power Generation		2,832.8		48		2,985.8		43		3,168.5		44
Chemicals		1,134.4		19		1,698.2		24		2,116.6		29
Other		76.2		1		84.8		1		155.7		2
Total revenues	$	5,937.7		100%	$	6,984.0		100%	$	7,276.3		100%

Our revenues by geographic region generally based on the site location of the project were as follows (in millions, except for percentages):

	Fiscal Year Ended August 31,
	2011				2010				2009
	Amount		%		Amount		%		Amount		%
United States	$	5,032.2		85	$	5,619.0		80	$	5,669.7		78
Asia/Pacific Rim countries		573.3		10		948.4		14		975.0		13
Middle East		141.7		2		263.2		4		386.3		5
United Kingdom and other European countries		105.8		2		67.6		1		127.9		2
South America and Mexico		56.2		1		16.0		—		51.8		1
Canada		18.8		—		23.3		—		37.7		1
Other		9.7		—		46.5		1		27.9		—
Total revenues	$	5,937.7		100%	$	6,984.0		100%	$	7,276.3		100%

Segment Analysis — Fiscal Year 2011 Compared to Fiscal Year 2010

Power Segment

Our Power segment continued executing major electric power generation projects across the globe. Work continues on three major EPC coal fired power plants in the U.S., but activity on two contracts for four domestic AP1000 nuclear units continues to increase and is becoming a more significant component of this segment’s revenues. Work also continues on our services contract for four new AP1000 nuclear power reactors in China. We expect to continue to see reduced activity for future new build coal-fired power plants as the market interest in these type projects has significantly declined. We believe there are significant opportunities for AQC related projects but these are dependent on finalizing pending air emission regulations in the U.S.. Interest in new build nuclear power plants and uprates on existing nuclear power plants was strong prior to the earthquakes, tsunami and subsequent damage to several of Japan’s nuclear reactors.  It is too early to determine the long-term impact of these events on new build nuclear power and uprate power markets, but our existing clients in the U.S. and China have stated their intentions to continue execution of existing contracts.

Revenues

Revenues decreased $181.1 million, or 7.9%, to $2,116.8 million in fiscal year 2011 from $2,297.9 million in fiscal year 2010. This decrease was primarily due to the substantial completion of several coal and AQC projects in fiscal year 2010 of $226.1 million, lower volume on continuing EPC coal projects of $189.8 million and an adverse jury verdict on a dispute that resulted in a reduction in revenue of $61.5 million compared to fiscal year 2010. This decrease was partially offset by volume increases of $274.1 million on our domestic AP1000 nuclear reactors, nuclear uprate projects, new build gas-fired power plants and other contracts, as well as a $24.8 million favorable arbitration award in Taiwan.

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Gross Profit and Gross Profit Percentage

Gross profit decreased $83.9 million, or 70.1%, to $35.8 million in fiscal year 2011 from $119.7 million in fiscal year 2010, and gross profit percentage decreased to 1.7% in fiscal year 2011 from 5.2% in fiscal year 2010. The decrease in gross profit and gross profit percentage was due to an adverse jury verdict that resulted in a reduction in gross profit of $63.4 million and reduced margin totaling $86.8 million related to cost increases on a new-build coal project.  Additionally, the substantial completion of several coal and AQC EPC projects in fiscal year 2010 contributed $5.2 million to the year-over-year reduction in gross profit.  Partially offsetting these decreases were increased gross profit of $52.1 million on on-going new-build coal and gas-fired EPC contracts as well as increased gross profit on domestic nuclear EPC projects, nuclear uprate projects and other contracts.  Additionally, gross profit increased $19.8 million as a result of a favorable arbitration award in Taiwan.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $63.1 million, or 97.2%, to $1.8 million in fiscal year 2011 from $64.9 million in fiscal year 2010. This decrease primarily resulted from the same factors affecting gross profit discussed above, partially offset by a decrease in SG&A in fiscal year 2011 as compared to fiscal year 2010.

Plant Services Segment

Our Plant Services segment generated increased revenue and record earnings in fiscal year 2011 compared to fiscal year 2010. These increases were driven primarily by projects for nuclear power plant refueling outages as well as growth in profitability of our industrial maintenance business line, including performing maintenance services for several new customers. Partially offsetting the increase in revenue and profits was a decline in the volume of construction projects due to an overall decline in client capital spending and significant competition.

Revenues

Revenues increased $43.7 million, or 5.0%, to $924.7 million in fiscal year 2011 from $881.0 million in fiscal year 2010. The increase was primarily attributable to increased revenues in the industrial maintenance business line as we have expanded our services to new customers and new markets.  In addition, the nuclear power plant maintenance business also experienced revenue growth in fiscal year 2011.  Partially offsetting this growth was a decline in the volume of construction work as compared to the prior fiscal year.

Gross Profit and Gross Profit Percentage

Gross profit increased $17.0 million, or 32.0%, to $70.2 million in fiscal year 2011 from $53.2 million in fiscal year 2010 and gross profit percentage increased to 7.6% in fiscal year 2011 from 6.0% in fiscal year 2010. The increases in gross profit and gross profit percentage were primarily due to execution in the nuclear maintenance market of both outage and on-line services as well as the continuation of a major project in the industrial maintenance business line.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities increased $16.1 million, or 36.8%, to $59.8 million in fiscal year 2011 from $43.7 million in fiscal year 2010.  The increase primarily resulted from the same factors affecting gross profit discussed above offset by a minimal increase in general and administrative expenses.

E&I Segment

Our E&I segment continues to produce profitable results even with decreased construction activity on our hurricane protection project, which is substantially complete.  Our long-term MOX project for the DOE in South Carolina will continue to be a significant contributor to our results as well as our existing projects for our government and private-sector customers, which provide environmental remediation, program management, emergency response and recovery, facility management and infrastructure services.

Revenues

Revenues decreased $320.9 million, or 14.5%, to $1,894.3 million in fiscal year 2011 from $2,215.2 million in fiscal year 2010 primarily due to decreased construction activity on the hurricane protection project for the USACE in southeast Louisiana and a previously consolidated joint venture that completed execution of a project for the DOE in the fourth quarter of fiscal year 2010.  The decrease was partially offset by our MOX project for the DOE, a design-build project for the U.S. Navy, also substantially complete, and remediation activities relating to the Fukushima, Japan nuclear reactors.

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Gross Profit and Gross Profit Percentage

Gross profit decreased $18.0 million, or 8.7%, to $188.8 million in fiscal year 2011 from $206.8 million in fiscal year 2010 while gross profit percentage increased to 10.0% in fiscal year 2011 from 9.3% in fiscal year 2010. The decrease in gross profit is primarily due to decreased activity from our hurricane protection project for the USACE partially offset by increased activity on our design-build project for the U.S. Navy and profit earned on projects with a favorable contract mix in fiscal year 2011 as compared to the prior fiscal year. The increase in gross profit percentage was due to the favorable contract mix in fiscal year 2011 as compared to the prior fiscal year, in part from our having no activity from a previously consolidated lower margin joint venture that completed execution of the cost reimbursable project for the DOE described above.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $21.5 million, or 15.5%, to $117.3 million in fiscal year 2011 from $138.8 million in fiscal year 2010. The decrease primarily resulted from the same factors affecting gross profit discussed above as well as a slight increase in selling, general and administrative expenses related to increased business development activities.

E&C Segment

Our E&C segment experienced significant forecast cost increases of approximately $183.7 million on a major international project during the fiscal year. Additionally, this segment continues to suffer from reduced quantity of bookings of new contracts that occurred throughout fiscal years 2010 and 2011.

Revenues

Revenues decreased $504.5 million, or 46.0%, to $593.3 million in fiscal year 2011 from $1,097.8 million in fiscal year 2010 due primarily to decreased revenue associated with an international project as a result of significant forecasted cost increases, reduced engineering services and procurement contracts from the prior year and a reduction in customer furnished materials and pass through revenues of $216.9 million for which we recognize no gross profit or loss.  Customer furnished materials and pass through costs were $19.7 million and $236.6 million for fiscal years 2011 and 2010, respectively.

Gross Profit and Gross Profit Percentage

Gross profit decreased $247.2 million, or 263.3%, to $(153.3) million in fiscal year 2011 from $93.9 million in fiscal year 2010.  Gross profit percentage decreased to (25.8)% in fiscal year 2011 from 8.6% in fiscal year 2010.  The decreases in gross profit and gross profit percentage were primarily due to the work-off of several high-margin engineering services and procurement contracts in fiscal year 2010 as well as $183.7 million in reduced margin related to forecasted cost increases to complete a major international project.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $238.0 million, or 499.0%, to a loss of $190.3 million in fiscal year 2011, compared to income of $47.7 million in fiscal year 2010. This decrease was primarily due to the factors affecting gross profit discussed above.

F&M Segment

Our F&M segment experienced an expected decline in volume and profits for fiscal year 2011 as a result of reduced amounts of non-nuclear bookings of new contracts through the prior fiscal year and because work associated with the AP1000 work subcontracted from our Power segment has yet to significantly impact revenues and earnings. A settlement of a client dispute in the fourth quarter of FY 2011 also decreased earnings. We expect this downturn in volume and profits to subsequently improve in fiscal year 2012 to the extent that our nuclear modular assembly activity accelerates.

Revenues

Revenues decreased $83.4 million, or 17.0%, to $408.6 million in fiscal year 2011 from $492.0 million in fiscal year 2010. This decrease was due to the completion of several large projects in the prior fiscal year which were not replaced in backlog and bending machine sales in fiscal year 2010 that did not occur in 2011.

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Gross Profit and Gross Profit Percentage

Gross profit decreased $42.8 million, or 45.8%, to $50.7 million in fiscal year 2011 from $93.5 million in fiscal year 2010. Gross profit percentage decreased to 12.4% in fiscal year 2011 from 19.0% in fiscal year 2010. The decreases in gross profit and gross profit percentage were primarily due to reduced client demand for pipe fabrication services overall and from a $16.8 million pre-tax adverse settlement of a dispute with a client.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $43.3 million, or 67.8%, to $20.6 million in fiscal year 2011 from $63.9 million in fiscal year 2010 primarily due to the factors affecting gross profit discussed above.

Investment in Westinghouse Segment

The results of our Investment in Westinghouse segment include both our 20% interest in Westinghouse’s reported earnings (loss), and the gain (loss) on translating the JPY-denominated Westinghouse Bonds (used to partially fund the Investment in Westinghouse in October 2006 through our subsidiary, NEH) to the USD equivalent at the end of each fiscal period. For fiscal years 2011 and 2010, the impact of the Investment in Westinghouse segment on our income (loss) before income taxes was $(201.9) and $(169.8), respectively.

Because the Westinghouse Bonds are denominated in JPY, at the end of each fiscal period, GAAP requires that we revalue for financial reporting purposes the JPY-denominated Westinghouse Bond debt to its USD equivalent at the JPY / US Dollar exchange rate in effect at the end of each fiscal period, with the difference being recognized as a non-cash gain or (loss) in our Statement of Operations for that fiscal period. The losses in fiscal years 2011 and 2010 were primarily attributable to the non-cash foreign currency translation losses of $159.0 million and $131.6 million, respectively, resulting from revaluing the JPY-denominated Westinghouse Bonds to the USD equivalent at the end of the fiscal period.

As a result of the Westinghouse Bond holders having the ability to require us to exercise the Put Option to retire the bonds due to the Toshiba Event described previously, we reclassified the Westinghouse Bonds from long-term to current liabilities in the third quarter of fiscal year 2009. Additionally, we contemporaneously expensed a pre-tax total of approximately $29.4 million in interest expense, which included the $22.8 million in pre-tax unamortized original issuance bond discount as well as the $6.6 million in unamortized deferred financing costs associated with the Westinghouse Bonds. See Item 1 – Business for additional information.

Our 20% interest in Westinghouse’s earnings was $34.0 million in fiscal year 2011, an increase from $15.7 million in fiscal year 2010. This increase was related to increases in revenues and operation profits in its Nuclear Services and Nuclear Fuel segments. Westinghouse maintains its accounting records for reporting to its majority owner, Toshiba, on a calendar quarter basis with a March 31 fiscal year end. Financial information about Westinghouse’s operations is available to us for Westinghouse’s calendar quarter periods. As a result, we record our 20% of Westinghouse’s earnings (loss) as reported to us by Westinghouse based upon Westinghouse’s calendar quarterly reporting periods, or two months in arrears of our current reporting periods. Under this policy, the results of Westinghouse’s operations from July 1, 2010, through their calendar quarter ended June 30, 2011, were included in our financial statements for the twelve months ended August 31, 2011; and the results of Westinghouse’s operations from July 1, 2009, through their calendar quarter ended June 30, 2010, were included in our financial statements for the twelve months ended August 31, 2010.

As noted previously, the Westinghouse Bonds are JPY-denominated. From time-to-time, we enter into foreign currency forward contracts to hedge the impact of exchange rate changes on our JPY-denominated cash interest payments on the Westinghouse bonds. We normally focus our hedge transactions to the JPY interest payments due within the following twelve months. On September 6, 2011, NEH announced that it intends to exercise its put options to sell the Westinghouse Equity to Toshiba which could also result in the retirement of the Westinghouse Bonds.

Corporate

Corporate SG&A expenses decreased $7.5 million, or 10.0%, to $67.4 million in fiscal year 2011 from $74.9 million in fiscal year 2010. This decrease was due primarily to lower compensation and severance costs, professional fees and non-income related taxes, partially offset by higher repairs and maintenance expenses associated with our Corporate aircraft, charitable contributions and depreciation expense.

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Segment Analysis — Fiscal Year 2010 Compared to Fiscal Year 2009

Power Segment

Our Power segment continued executing major electric power generation projects across the globe during fiscal year 2010. The segment’s activity increased on two contracts for four domestic AP1000 nuclear units and two domestic new build gas-fired plants. Additionally, work continues on our services contract for four new AP1000 nuclear power reactors in China. However, reduced demand for electricity in the U.S. and uncertainty regarding air emission regulations in the U.S. contributed to a decline in our coal and air quality control businesses where we saw substantially reduced activities, opportunities and new awards throughout fiscal year 2010.

Revenues

Revenues decreased $283.3 million, or 11.0%, to $2,297.9 million in fiscal year 2010 from $2,581.2 million in fiscal year 2009. This decrease was primarily due to the significant decline in volume in our AQC and coal business lines attributable to the substantial completion of several large projects in fiscal year 2009. When aggregated, the reduced activity on those projects resulted in decreased revenue of approximately $861.9 million in fiscal year 2010 compared to fiscal year 2009. This decrease was partially offset by increased volume on two contracts for four domestic AP1000 nuclear reactors, two new build gas-fired power plants, and our services contract for four new AP1000 nuclear power reactors in China representing approximately $610.6 million in increased revenue in fiscal year 2010 compared to fiscal year 2009.

Gross Profit and Gross Profit Percentage

Gross profit increased $32.7 million, or 37.6%, to $119.7 million in fiscal year 2010 from $87.0 million in fiscal year 2009, and gross profit percentage increased to 5.2% in fiscal year 2010 from 3.4% in fiscal year 2009. The increases in gross profit and gross profit percentage were due to increased activity in fiscal year 2010 on domestic AP1000 contracts and increased profitability in our coal business lines which, when aggregated, added $108.9 million in gross profit in fiscal year 2010 compared to fiscal year 2009.  Additionally, we have made progress in achieving price certainty on a number of key commodities, which resulted in reductions to our estimated cost at completion on a number of contracts. In fiscal year 2009, we reported significantly increased estimated costs to complete two coal-fired power plant projects, one of which amounted to $73.9 million. Higher legal costs and reduced volumes in our AQC business line in fiscal year 2010 partially offset the increases in gross profit described previously.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities increased $35.6 million, or 121.5%, to $64.9 million in fiscal year 2010 from $29.3 million in fiscal year 2009. This increase primarily resulted from the same factors affecting gross profit discussed above, as well as a slight decrease in the segment’s general and administrative expenses in fiscal year 2010 as compared to fiscal year 2009.

Plant Services Segment

Our Plant Services segment generated increased revenue and profitability in fiscal year 2010 compared to fiscal year 2009. These increases were driven primarily by projects for nuclear power plant refueling outages for new and existing clients. Partially offsetting the increase in revenue and profits was a decline in the volume of construction projects due to an overall  decline in client capital spending and significant competition in the process and industrial markets.

Revenues

Revenues increased $16.9 million, or 2.0%, to $881.0 million in fiscal year 2010 from $864.1 million in fiscal year 2009. The increases were primarily attributable to a greater number and longer duration of nuclear power plant refueling outages for new and existing clients of approximately $79.0 million. A decline in the volume of smaller project awards partially offset increased revenues in fiscal year 2010 as compared to fiscal year 2009 resulting from an overall decline in overall construction spending and significant competition in the process and industrial markets.

Gross Profit and Gross Profit Percentage

Gross profit increased $35.4 million, or 198.9%, to $53.2 million in fiscal year 2010 from $17.8 million in fiscal year 2009 and gross profit percentage increased to 6.0% in fiscal year 2010 from 2.1% in fiscal year 2009. The increases in gross profit and gross profit percentage were primarily due to the increased number and length of nuclear refueling outages in fiscal year 2010 as well as a reduction of indirect expenses of approximately $14.5 million compared to fiscal year 2009. Fiscal year 2009’s gross profit and gross profit percentage were negatively impacted in the second quarter of fiscal 2009 by the resolution of a dispute with the owner of a major domestic power project.

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Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities increased $37.0 million, or 552.2%, to $43.7 million in fiscal year 2010 from $6.7 million in fiscal year 2009. The increase primarily resulted from the same factors affecting gross profit discussed above as well as lower general and administrative expenses.

E&I Segment

Our E&I segment’s revenues and profitability increased during fiscal year 2010 as compared to fiscal year 2009. These increases were driven primarily by our activities on our hurricane protection project for the USACE in southeast Louisiana, construction services for the temporary sand berms off the coast of Louisiana and our MOX project for the DOE in South Carolina.

Revenues

Revenues increased $379.7 million, or 20.7%, to $2,215.2 million in fiscal year 2010 from $1,835.5 million in fiscal year 2009 primarily due to increased volumes of services provided to the U.S. government, led by increased construction activity on the hurricane protection project for the USACE, the temporary sand berm construction and our MOX project.

Gross Profit and Gross Profit Percentage

Gross profit increased $45.1 million, or 27.9%, to $206.8 million in fiscal year 2010 from $161.7 million in fiscal year 2009 while gross profit percentage increased to 9.3% in fiscal year 2010 from 8.8% in fiscal year 2009. The increase in gross profit is primarily due to activity on a hurricane protection, sand berm  and MOX projects noted above. Gross profit and gross profit percentage also increased due to the overall volume increases and lower overhead costs as a percentage of revenue as compared to the prior fiscal year.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities increased $47.8 million, or 52.5%, to $138.8 million in fiscal year 2010 from $91.0 million in fiscal year 2009. The increase primarily resulted from the same factors affecting gross profit discussed above.

E&C Segment

As anticipated, our E&C segment results were adversely impacted by the current economic climate resulting in lower revenues and earnings in fiscal year 2010 as compared to the record levels in the fiscal year 2009. Revenues for E&C decreased from fiscal year 2009 primarily due to reduced volumes of customer furnished materials and reimbursable costs which are invoiced to clients without profit and reduced revenues from engineering projects as a result of decreased new work awards.

Revenues

Revenues decreased $270.3 million, or 19.8%, to $1,097.8 million in fiscal year 2010 from $1,368.1 million in fiscal year 2009 due primarily to a decrease of approximately $188.6 million in the volume of reimbursable customer furnished materials for which we recognize no gross profit or loss and a decline in engineering services projects due to lack of new awards. Partially offsetting these decreases was increased volume on a major international ethylene project in Asia.  The reduced margin was most prevalent during the fourth quarter of fiscal year 2010 when field costs increased on the international ethylene project.

Gross Profit and Gross Profit Percentage

Gross profit decreased $101.4 million, or 51.9%, to $93.9 million in fiscal year 2010 from $195.3 million in fiscal year 2009.  Gross profit percentage decreased to 8.6% in fiscal year 2010 from 14.3% in fiscal year 2009.  The decrease in gross profit is due to the lower volume of engineering contracts in fiscal year 2010 compared to fiscal year 2009.  The decrease in gross profit percentage is a result of lower volumes of higher margin engineering projects and increased revenue from our major international ethylene project in Asia which has a lower gross margin percentage than our engineering projects.

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Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $101.9 million, or 68.1%, to $47.7 million in fiscal year 2010 from $149.6 million in fiscal year 2009. This decrease was primarily due to the factors affecting gross profit discussed above.

F&M Segment

Our F&M segment experienced decreased business volumes in fiscal 2010 from the record levels in fiscal year 2009. The global economic downturn negatively impacted our end markets, particularly clients in the oil refining and chemical/petrochemical industries with many projects being delayed into fiscal 2011. As a result, our non-nuclear bookings and profits declined in fiscal 2010. We expect the downturn in volume and profits to continue into the first half of fiscal year 2011 but subsequently to improve to the extent that the modular assembly and pipe fabrication work associated with the AP1000 work subcontracted from our Power segment commences.

Revenues

Revenues decreased $131.4 million, or 21.1%, to $492.0 million in fiscal year 2010 from $623.4 million in fiscal year 2009. This decrease was due to lower volumes resulting from lower bookings across the majority of our U.S. operations as a result of global economic environment partially offset by higher revenues in our Mexican operations.

Gross Profit and Gross Profit Percentage

Gross profit decreased $44.5 million, or 32.2%, to $93.5 million in fiscal year 2010 from $138.0 million in fiscal year 2009. Gross profit percentage decreased to 19.0% in fiscal year 2010 from 22.1% in fiscal year 2009. The decrease in gross profit and gross profit percentage was primarily due to reduced client demand for pipe fabrication services, a more competitive pricing environment and the completion of higher margin contracts in fiscal year 2010 as compared to fiscal year 2009.

Income (loss) before income taxes and earnings (losses) fromunconsolidated entities

Income before income taxes and earnings from unconsolidated entities decreased $42.7 million, or 40.1%, to $63.9 million in fiscal year 2010 from $106.6 million in fiscal year 2009 primarily due to the factors affecting gross profit discussed above.

Investment in Westinghouse Segment

The results of our Investment in Westinghouse segment include both our 20% interest in Westinghouse’s reported earnings (loss), and the gain (loss) on translating the JPY-denominated Westinghouse Bonds (used to partially fund the Investment in Westinghouse in October 2006 through our subsidiary, NEH) to the USD equivalent at the end of each fiscal period. For fiscal years 2010 and 2009, we incurred pre-tax losses of $169.8 million and $267.0 million in our Investment in Westinghouse segment. These results do not include any Westinghouse Dividends.

Because the Westinghouse Bonds are denominated in JPY, at the end of each fiscal period, GAAP requires that we revalue for financial reporting purposes the JPY-denominated Westinghouse Bond debt to its USD equivalent at the JPY / US Dollar exchange rate in effect at the end of each fiscal period, with the difference being recognized as a non-cash gain or (loss) in our Statement of Operations for that fiscal period. The losses in fiscal years 2010 and 2009 were primarily attributable to the non-cash foreign currency translation losses of $131.6 million and $198.1 million, respectively, resulting from revaluing the JPY-denominated Westinghouse Bonds to the USD equivalent at the end of the fiscal period.

As a result of the Westinghouse Bond holders having the ability to require us to exercise the Put Option to retire the bonds due to the Toshiba Event described previously, we reclassified the Westinghouse Bonds from long-term to current liabilities in the third quarter of fiscal year 2009. Additionally, we were required to expense a pre-tax total of $29.4 million in as interest expense, which included the $22.8 million in pre-tax unamortized original issuance bond discount as well as the $6.6 million in unamortized deferred financing costs associated with the Westinghouse Bonds. See Item 1 – Business for additional information.

Our 20% interest in Westinghouse’s earnings increased $4.2 million, or 36.5%, to $15.7 million in fiscal year 2010 from $11.5 million in fiscal year 2009. This increase was related to increases in revenues and operation profits in its Nuclear Services and Nuclear Power Plants segments. Westinghouse maintains its accounting records for reporting to its majority owner, Toshiba, on a calendar quarter basis with a March 31 fiscal year end. Financial information about Westinghouse’s operations is available to us for Westinghouse’s calendar quarter periods. As a result, we record our 20% of Westinghouse’s earnings (loss) as reported to us by Westinghouse based upon Westinghouse’s calendar quarterly reporting periods, or two months in arrears of our current reporting periods. Under this policy, the results of Westinghouse’s operations from July 1, 2009, through their calendar quarter ended June 30, 2010, were included in our financial statements for the twelve months ended August 31, 2010; and the results of Westinghouse’s operations from July 1, 2008, through their calendar quarter ended June 30, 2009, were included in our financial statements for the twelve months ended August 31, 2009.

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As noted previously, the Westinghouse Bonds are JPY-denominated. From time-to-time, we enter into foreign currency forward contracts to hedge the impact of exchange rate changes on our JPY-denominated cash interest payments on the Westinghouse bonds,. We normally focus our hedge transactions to the JPY interest payments due within the following twelve months. On September 6, 2011, NEH announced that it intends to exercise its put options to sell the Westinghouse Equity to Toshiba, the ultimate result of which could be the retirement of the Westinghouse Bonds.

Corporate

Corporate SG&A expenses decreased $16.4 million, or 18.0%, to $74.9 million in fiscal year 2010 from $91.3 million in fiscal year 2009. This decrease was due primarily to the successful remediation of material weaknesses in fiscal year 2009 resulting in lower professional fees in the current fiscal year, lower non-income-related tax expenses in fiscal year 2010, and lower compensation costs. This decrease was partially offset by an increase in health insurance costs.

Non-GAAP Financial Measure

EBITDA is a supplemental, non-GAAP financial measure and is a measure of operating performance used internally. EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization. We have presented EBITDA because it is used by the financial community as a method of measuring our performance and of evaluating the market value of companies considered to be in similar businesses. We believe that the line item on our consolidated statements of operations entitled “Income (loss) before income taxes and earnings (losses) from unconsolidated entities” is the most directly comparable GAAP measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, income (loss) before income taxes and earnings (losses) from unconsolidated entities as an indicator of operating performance. EBITDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, this measure is not necessarily a measure of our ability to fund our cash needs. As EBITDA excludes certain financial information as compared with income (loss) before income taxes and earnings (losses) from unconsolidated entities, the most directly comparable GAAP financial measure, users of this financial information should consider the type of events and transactions which are excluded. Our non-GAAP performance measure, EBITDA, has certain material limitations as follows:

• It does not include interest expense. Because we have borrowed money to finance our operations, pay commitment fees to maintain our credit facility, and incur fees to issue letters of credit under the credit facility, interest expense is a necessary and ongoing part of our costs and has assisted us in generating revenue. Therefore, any measure that excludes interest expense has material limitations.

• It does not include income taxes. Because the payment of income taxes is a necessary and ongoing part of our operations, any measure that excludes income taxes has material limitations.

• It does not include depreciation or amortization expense. Because we use capital and intangible assets to generate revenue, depreciation and amortization expense is a necessary element of our cost structure. Therefore, any measure that excludes depreciation or amortization expense has material limitations.

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A reconciliation of EBITDA to income (loss) before income taxes and earnings (losses) from unconsolidated entities is shown below (in millions):

	Fiscal Year Ended August 31, 2011
	Consolidated			Power		Plant Services		E&I			E&C			F&M		Westinghouse			Corporate
Income (loss) before income taxes and earnings (losses) from unconsolidated entities:	$	(300.9	)	$	1.8	$	59.8	$	117.3		$	(190.3	)	$	20.6	$	(201.9	)	$	(108.2	)
Interest expense		47.1			0.5		—		—			0.1			—		41.6			4.9
Depreciation and amortization		73.9			27.6		1.8		13.9			10.3			17.5		—			2.8
Earnings (losses) from unconsolidated entities		41.9			0.6		—		1.2			6.1			—		34.0			—
Income attributable to noncontrolling interests		(7.1	)		—		—		(9.4	)		—			2.3		—			—
EBITDA	$	(145.1	)	$	30.5	$	61.6	$	123.0		$	(173.8	)	$	40.4	$	(126.3	)	$	(100.5	)

Fiscal Year Ended August 31, 2010
Consolidated	Power	Plant Services	E&I	E&C