Washington Group International Inc · 8-K · For 7/24/01 · EX-99.2

Filed On 8/2/01 4:35pm ET   ·   SEC File 1-12054   ·   Accession Number 912057-1-526327

Current Report   ·   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         5     11K 
 2: EX-99.1     Miscellaneous Exhibit                                 39    201K 
 3: EX-99.2     Miscellaneous Exhibit                                955± 2,392K 

EX-99.2   ·   Miscellaneous Exhibit
Exhibit Table of Contents

EX-99.2
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                                                                    Exhibit 99.2

 IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA

-------------------------------------                                           
                      )     Case No. BK-N-01-31627
In re                                )     (Chapter 11)                         
)     
WASHINGTON GROUP                     )     DISCLOSURE STATEMENT WITH            
INTERNATIONAL, INC., ET AL.,         )     RESPECT TO SECOND AMENDED JOINT      
                         )     PLAN OF REORGANIZATION OF
                               )     WASHINGTON GROUP INTERNATIONAL,
            )     INC., ET AL.
)     
)     
Debtors.                             )                                          
-------------------------------------)                                          

David S. Kurtz                             Jennifer A. Smith (State Bar No. 610)
Timothy R. Pohl                            Etta L. Walker (State Bar No. 5537)  
SKADDEN, ARPS, SLATE, MEAGHER              LIONEL SAWYER & COLLINS              
& FLOM (ILLINOIS)                       1100 Bank of America Plaza        
333 West Wacker Drive                      50 W. Liberty St.                    
Chicago, Illinois 60606                    Reno, Nevada 89501                   
(312) 407-0700                             (775) 788-8666                       

Gregg M. Galardi                                                                
Eric M. Davis                                                                   
SKADDEN, ARPS, SLATE, MEAGHER                                                   
& FLOM LLP                                                                
One Rodney Square                                                               
Wilmington, Delaware 19899                                                      
(302) 651-3000                                                                  

Attorneys for the Debtors and 
Debtors-in-Possession         

Dated:   July 24, 2001                                                          

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DISCLAIMER

             THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS
INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE SECOND AMENDED    
JOINT PLAN OF REORGANIZATION (THE "PLAN") OF WASHINGTON GROUP INTERNATIONAL,    
INC. AND ITS AFFILIATED DEBTORS AND DEBTORS IN POSSESSION AND MAY NOT BE RELIED 
UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. NO PERSON 
MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION
AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN  
OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN.                                 

         ALL CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS
DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR  
REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT
ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN AND THE EXHIBITS AND   
SCHEDULES ANNEXED TO THE PLAN AND THIS DISCLOSURE STATEMENT. THE STATEMENTS     
CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND 
THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT  
AT ANY TIME AFTER THE DATE HEREOF.                                              

                  THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH
SECTION 1125 OF THE UNITED STATES BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL  
RULES OF BANKRUPTCY PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR 
STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS
BEEN NEITHER APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION 
(THE "SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE        
STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE        
PURCHASING, SELLING OR TRANSFERRING SECURITIES OR CLAIMS OF WASHINGTON GROUP    
INTERNATIONAL, INC. OR ANY OF THE AFFILIATED DEBTORS AND DEBTORS-IN-POSSESSION  
IN THESE CASES SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT  
OF THE PURPOSE FOR WHICH THEY WERE PREPARED.                                    

            AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER
ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR
BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER,   
BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE      
STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR SHALL IT 
BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL      
EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS AGAINST, OR EQUITY INTERESTS IN,    
WASHINGTON GROUP INTERNATIONAL, INC. OR ANY OF THE AFFILIATED DEBTORS AND       
DEBTORS-IN-POSSESSION IN THESE CASES.                                           

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 OVERVIEW OF THE PLAN AND CHAPTER 11 CASES

                THE FOLLOWING INTRODUCTION AND SUMMARY IS A GENERAL OVERVIEW
ONLY, WHICH IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION  
WITH, THE MORE DETAILED DISCUSSIONS, INFORMATION AND FINANCIAL STATEMENTS AND   
NOTES THERETO APPEARING ELSEWHERE IN THIS DISCLOSURE STATEMENT AND THE SECOND   
AMENDED JOINT PLAN OF REORGANIZATION OF WASHINGTON GROUP INTERNATIONAL, INC. AND
ITS AFFILIATED DEBTORS AND DEBTORS IN POSSESSION (THE "PLAN"). All capitalized  
terms not defined in this Disclosure Statement have the meanings ascribed to    
such terms in the Plan. A copy of the Plan is annexed hereto as APPENDIX A.     

           This Disclosure Statement contains, among other things,
descriptions and summaries of provisions of the Plan being proposed by the      
Debtors dated as of July 24, 2001. Negotiations with respect to certain issues  
are ongoing, and the Debtors reserve the right to modify the Plan consistent    
with section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019.              

A.       BUSINESS OVERVIEW                                                      

               Washington Group International, Inc. ("WGI") and its direct
and indirect subsidiaries, together with the various partnerships and joint     
ventures in which WGI or its subsidiaries participate (collectively, the        
"Subsidiaries" and, together with WGI, the "Company"), is an international      
provider of a broad range of design, engineering, construction, construction    
management, facilities and operations management, environmental remediation and 
mining services to diverse public and private sector clients. In fiscal 2000,   
the Company had revenue of approximately $3.2 billion.                          

         As discussed in more detail below, as a result of the
acquisition of certain businesses from Raytheon Company in July 2000, the       
Company experienced a liquidity crisis beginning in early 2001, which ultimately
led to the commencement, on May 14, 2001, of reorganization cases (the "Chapter 
11 Cases") under Chapter 11 of the United States Bankruptcy Code for WGI and    
certain of WGI's direct and indirect Subsidiaries (collectively, the "Debtors").
COMPANIES OR ENTITIES (SUCH AS JOINT VENTURES AND WESTINGHOUSE GOVERNMENT       
SERVICES COMPANY LLC AND ITS SUBSIDIARIES) THAT ARE NOT WHOLLY-OWNED BY WGI, AND
FOREIGN ENTITIES, (COLLECTIVELY, THE "NON-DEBTOR SUBSIDIARIES"), HAVE NOT       
COMMENCED CASES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE AND CONTINUE TO OPERATE 
THEIR BUSINESSES IN THE ORDINARY COURSE UNAFFECTED BY THE DEBTORS' CHAPTER 11   
CASES. THE NON-DEBTOR SUBSIDIARIES ARE LISTED ON SCHEDULE 1.67 TO THE PLAN.     

           During the quarter ended September 1, 2000, the Company
reorganized its businesses to operate through five operating units: Power,      
Infrastructure & Mining, Industrial/Process, Government, and Petroleum &        
Chemicals. These units serve different markets and customers, and differ in     
their expertise, technology and resources necessary to perform their services.  

               POWER provides engineering, construction and operations and
                 maintenance services in both nuclear and fossil power markets
              for turnkey new power plant construction, plant expansion,
  retrofit and modification, decontamination and
               decommissioning, general planning, siting and licensing and
environmental permitting.                   

            INFRASTRUCTURE & MINING provides diverse engineering and
                 construction and construction management services on highways
                 and bridges, airports and seaports, tunnels and tube tunnels,
                  railroad and transit lines, water storage and transport, water
                  treatment, site development, mine operations and hydroelectric
         facilities. The group generally performs as a general
       contractor or as a joint venture partner with other
       contractors on domestic and international projects.

                 INDUSTRIAL/PROCESS provides engineering, design, procurement,
             construction services and total facilities management for
            general manufacturing, pharmaceutical and biotechnology,
             process, metal processing, institutional buildings, food,
       automotive and consumer products for the aerospace,
     telecommunications and pulp and paper industries.

                 GOVERNMENT provides a complete range of technical services to
         the U.S. Departments of Energy and Defense, including
                  operations and management services, environmental and chemical
             demilitarization services, waste handling and storage and
               weapons stockpile support. Services provided for commercial
           clients include design and manufacture of components of
               nuclear power facilities, safety management services, waste
           and environmental technology, design and manufacture of
radioactive waste containers and licensing. 

           PETROLEUM & CHEMICALS provides technology, engineering,
              procurement and construction services to the petroleum and
        chemical industries worldwide. Major markets include
          commodity-organic chemicals, polymers, Fischer-Tropsch
               chemistry, fertilizers, oleochemicals, petroleum processing
and lube oil processing.                    

                 The Company's core businesses have been financially sound and
profitable, and the need for a financial restructuring in Chapter 11 is the     
direct result of the significant unknown liabilities embedded in certain        
construction projects acquired in the Raytheon                                  

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transaction. Generally, the Company's customers include, to a large degree,     
Fortune 500 companies and government entities. Projects on which the Company    
works often take years to complete, and may require financial commitments of up 
to hundreds of millions of dollars from the project owners. As discussed in more
detail below, many of these project owners are understandably reluctant to award
new work to a company in Chapter 11, and the ability to procure new work on an  
ongoing basis is the lifeblood of an engineering and construction company.      
Accordingly, the Company believes that in order to maintain and create new value
in its businesses, the Debtors' Chapter 11 Cases must proceed on a fast-track   
basis, with the restructuring under the Plan completed as quickly as            
practicable.                                                                    

B.       THE RAYTHEON TRANSACTION                                               

            On July 7, 2000, WGI acquired the businesses of Raytheon
Engineers & Constructors International, Inc. ("RECI") from Raytheon Company     
("Raytheon"). The acquisition was pursuant to a Stock Purchase Agreement, dated 
as of April 14, 2000 (the "Stock Purchase Agreement"), among WGI, Raytheon and  
RECI. Under the Stock Purchase Agreement, WGI purchased the capital stock of the
subsidiaries of RECI and certain other assets of RECI and assumed certain       
liabilities of RECI (the "RE&C Businesses"). Prior to such purchase, RECI       
provided engineering, design, procurement, construction, operation, maintenance 
and other services on a worldwide basis.                                        

              Because of the size and complexity of the businesses being
sold to WGI, the Stock Purchase Agreement did not contain a fixed purchase price
for the transaction, but rather provided that the purchase price would be       
calculated using an audited balance sheet and a cut-off balance sheet for the   
RE&C Businesses, both as of April 30, 2000, along with other related documents, 
and that the price paid at closing of the transaction would be subject to a     
purchase price adjustment. The acquisition of the RE&C Businesses closed on July
7, 2000 (the "RE&C Businesses Acquisition"). WGI paid a cash purchase price of  
$53 million at closing and assumed certain liabilities, which, in the           
preliminary unaudited April 30, 2000 balance sheet provided by Raytheon, were   
estimated to be approximately $450 million.                                     

                After closing, WGI obtained access to the complete books and
records of the RE&C Businesses acquired from Raytheon and to key project        
management. WGI took over the management and administration of the RE&C         
Businesses and began to uncover the true state of the RE&C Businesses.          
Additionally, post-closing, WGI expected Raytheon to comply with its obligations
to diligently pursue the purchase price adjustment process. Pursuant to various 
agreements reached between WGI and Raytheon, the date by which Raytheon and RECI
were to deliver to WGI the audited April 30, 2000 balance sheet and related     
certifications for the purchase price adjustment process was extended to January
14, 2001. Such documents were not delivered to WGI at that time and had not been
delivered by May 14, 2001. As a result of the litigation pursued by WGI in the  
District Court for Ada County, Idaho (the "Idaho Court") against Raytheon, as   
discussed below and in SECTION V.I.1, Raytheon was ordered to provide to WGI    
documents necessary to commence the purchase price adjustment process by June 5,
2001, and the Idaho Court appointed an independent accountant to resolve any    
disputes. On June 5, 2001, Raytheon provided, pursuant to court orders, an      
unaudited April 30, 2000 balance sheet and cut-off balance sheet, which are the 
starting documents for the purchase price adjustment process. WGI responded to  
those documents on June 29, 2001. Both WGI and Raytheon are required to present 
materials to the independent accountant supportive of their respective positions
on or before July 30, 2001. Accordingly, WGI has not been able to finalize the  
purchase price for the transaction consummated by the Stock Purchase Agreement, 
but that process is being pursued.                                              

               On October 23, 2000, WGI reported its results for the third
quarter of 2000. In its Form 10Q filing, WGI reported that, as a result of its  
preliminary assessment of the RE&C Businesses, WGI increased the amount of the  
liabilities it assumed by over $700 million, and increased its goodwill arising 
out of the acquisition by over $700 million from the amount WGI had expected to 
book to approximately $1.2 billion. WGI's review is ongoing and it continues to 
uncover significant, previously undisclosed, adverse facts about the assets     
acquired, as well as Raytheon's inappropriate accounting for those assets.      

                  As a result of its continuing post-acquisition in-depth review
of the RE&C Businesses acquired, the Debtors believe that Raytheon management   
consistently engaged in inappropriate accounting practices and intentional      
earnings manipulation by overstating revenue and assets, understating costs,    
avoiding recognition of losses and thereby severely overstating profits and     
assets and understating losses on numerous projects. Consequently, on March 8,  
2001, WGI filed suit against Raytheon and RECI in the Idaho Court, alleging     
fraud and seeking rescission and, alternatively, unspecified damages and        
specific performance for breach of the Stock Purchase Agreement. Other than the 
preliminary injunction related to the Purchase Price Adjustment process, that   
dispute was stayed in favor of an arbitration commenced by Raytheon on March 27,
2001 seeking declaratory relief as to which a counterclaim was filed by WGI     
involving the same issues raised in the Idaho Court action. The arbitration is  
being held in abeyance, at this time, as a result of WGI's Chapter 11 filing.   
The Debtors also will assert claims against Raytheon pursuant to an action that 
will be commenced in the Bankruptcy Court on or before August 3, 2001 under,    
among others, sections 544, 547, 548 and 550 of the Bankruptcy Code. See SECTION
V.I.1 for a summary of the Raytheon litigation. As discussed in Section VII.C,  
under the Plan, all such claims and causes of action will be assigned to the WGI
Creditor Trust, which will be funded with $20 million to prosecute such claims. 

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                The results of WGI's acquisition of the RE&C Businesses were
disastrous for the Company. As a direct result, the Company encountered a severe
near-term liquidity crisis, defaulted on certain covenants in its credit        
facilities, and became unable to secure performance bonds necessary to obtain   
certain new jobs, thus impeding the Company's ability to obtain certain future  
work. Contrary to Raytheon's stated annual $140 million EBITDA that would be    
produced from the acquisition of the RE&C Businesses, these assets have failed  
to produce the represented results and Raytheon's failure to disclose losses    
embedded in certain contracts is directly responsible for the Company's         
deteriorated financial condition and the commencement of these Chapter 11 Cases.

           Raytheon disputes all claims asserted against it by the
Company and asserts significant claims against the Debtors. SECTION C of this   
Overview immediately below, and APPENDIX D to this Disclosure Statement, were   
drafted by Raytheon and contain statements by Raytheon regarding its disputes   
with the Debtors. The Debtors dispute Raytheon's assertions in these statements 
in virtually all material respects.                                             

C.       RAYTHEON STATEMENT REGARDING DISPUTES WITH THE DEBTORS                 

    Raytheon vigorously disputes WGI's claims of misrepresentation and
fraud by Raytheon and believes that those charges are a subterfuge for WGI's    
mismanagement of a huge acquisition that it now regrets. Raytheon is WGI's      
largest creditor, and expects to present a proof of claim in the range of $900  
million. Claims against Raytheon are not a net asset, as the Debtor would have  
creditors believe; at best they may serve to reduce the amount of Raytheon's    
claim. Accordingly, Raytheon believes that no class 7 creditor will receive any 
value under the plan. The plan proposed by WGI is a going concern collateral    
liquidation proposed by WGI solely for the benefit of the banks and WGI         
management.                                                                     

        At the core of all of the disputes between Raytheon and the Debtors is
a Stock Purchase Agreement dated as of April 14, 2000 ("SPA"). Pursuant to the  
SPA, Raytheon and an affiliate on July 7, 2000 conveyed to one of the Debtors   
the stock of a variety of subsidiaries constituting its E&C business, as well as
certain related assets. In addition, the SPA contains a detailed set of         
substantial obligations that remained executory as of the Petition Date. Some of
these run in favor of Raytheon; some in favor of the Debtors. The               
financially-significant items running in favor of Raytheon are (i) the Debtors' 
absolute obligation to indemnify Raytheon against all project risk on most of   
the sold business, including exposure under letters of credit, guaranties, and  
surety bonds that have since been called, and (ii) the Debtors' obligation to   
pay to Raytheon a 75% share of all moneys received on a class of Debtor claims, 
the ("Retained Claims") after the first $30 million. The financially-significant
items running in favor of the Debtors are (iii) Raytheon's obligation to        
indemnify WGI against its actual out-of-pocket expenditure on a certain class of
potential third-party claims against the Debtor ("Specified Seller              
Liabilities"), (iv) a specific, project-by-project list of indemnities          
undertaken by Raytheon (as to which Raytheon has fully performed), (v)          
Raytheon's obligation to repurchase a class of Debtor receivables (the "RR      
Assets"), and (vi) a set of specific representations made by Raytheon as to     
which, in the event the Debtors could prove the elements of misrepresentation,  
they may receive up to (but no more than) $87.5 million.                        

       ITEM (vii). In addition, the SPA contains a purchase price adjustment
clause. Raytheon has presented an analysis showing that it is owed approximately
$13 million. The Debtor has presented an analysis claiming an adjustment in its 
favor in the amount of $469 million. While at this point, it is unclear which   
party that clause will benefit, it appears that the disparity in the analysis   
derives chiefly from the Debtor's failure to apply the deal-specific rules on   
project accounting, set forth in Schedule 3.3(a) to the SPA.                    

     Raytheon believes that the netting of the claims will result in the
members of Class 7 receiving no value under the Plan. Please see APPENDIX D for 
a brief summary of Raytheon's position with respect to the disputes between it  
and the Debtors.                                                                

D.       EXISTING CAPITAL STRUCTURE                                             

                  In order to finance the acquisition of the RE&C Businesses, to
refinance existing indebtedness outstanding at that time, and to provide        
additional working capital, WGI, various subsidiary guarantors of WGI (the      
"Guarantors"), Credit Suisse First Boston ("CSFB") as administrative and        
collateral agent, and various lenders (the "Prepetition Secured Lenders"),      
entered into a secured credit facility (the "Prepetition Senior Secured Credit  
Facility") that provided for $1.2 billion in availability. As of the Petition   
Date, obligations to the Prepetition Secured Lenders under the Prepetition      
Senior Secured Credit Facility totaled approxi mately $702 million, inclusive of
approximately $130 million in undrawn letters of credit outstanding. The        
obligations under the Prepetition Senior Secured Credit Facility are secured by 
liens on the assets of WGI and the Guarantors, subject to certain specific      
exceptions, which assets the Debtors and the Prepetition Secured Lenders believe
constitute substantially all of the value of the Company's businesses. The      
Prepetition Secured Lenders assert that they have liens on certain of the claims
against Raytheon to be transferred to the WGI Creditor Trust. Such liens, if    
any, will be released upon consummation of the Plan. See SECTION III.B.2 for a  
description of the Prepetition Senior Secured Credit Facility.                  

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            As of the Petition Date, WGI and the Guarantors were the
issuer and guarantors, respectively, of WGI's senior notes due July 1, 2010, in 
the principal amount of $300 million (the "Old Notes"). The Old Notes were      
issued pursuant to an Indenture dated as of July 7, 2000 and are unsecured.     
United States Trust Company of New York is the Indenture Trustee under that     
Indenture, and is a member of the Creditors' Committee. See SECTION III.B.3 for 
a description of the Old Notes.                                                 

          As of the Petition Date, the Debtors collectively were
indebted to vendors, subcontractors and other creditors as a result of ordinary 
course obligations in amounts exceeding $150 million. The Debtors also have     
disputed and/or contingent prepetition liabilities related to a variety of      
pending litigation claims. All of these obligations are unsecured. As discussed 
below and in SECTION V.B, the Debtors sought and obtained authority during the  
Chapter 11 Cases to pay certain of such claims in the ordinary course of        
business.                                                                       

            WGI's existing common stock (the "Old Common Stock") was
traded on the New York Stock Exchange. Approximately 39% of the Old Common Stock
is owned or controlled by Mr. Dennis Washington. SEE SECTION III.B.1. On May 14,
2001, the New York Stock Exchange ("NYSE") suspended trading of the Old Common  
Stock and initiated delisting procedures.                                       

E.       EXPLORATION OF STRATEGIC ALTERNATIVES AND PROCUREMENT OF DIP FINANCING 

           Faced with a severe liquidity crisis resulting from the
acquisition of the RE&C Businesses, in the months prior to the commencement of  
the Chapter 11 Cases, the Company began exploring alternatives to obtain        
additional liquidity and to preserve and maximize the value of their businesses 
for the benefit of creditors. In early 2001, the Company attempted to negotiate 
a settlement with Raytheon, which efforts were unsuccessful. In March, 2001, the
Company took the unprecedented step suspending performance on two projects      
acquired as part of the acquisition of the RE&C Businesses, but with respect to 
which Raytheon retained liability under guaranty agreements with the project    
owners. Those projects, which had particularly large cash flow requirements to  
complete, are projects to build two power plants in Massachusetts for entities  
affiliated with Sithe Energies, Inc. (collectively, "Sithe"). See SECTION V.I.2 
for a discussion of litigation commenced against the Debtors in the Bankruptcy  
Court by Mitsubishi Heavy Industries, Ltd. and Mitsubishi Heavy Industries      
America, Inc. (collectively "Mitsubishi"), a large vendor with respect to the   
Sithe projects.                                                                 

            Despite taking this action in an effort to preserve cash
resources, by April 2001, the Company had an acute need for additional cash     
liquidity to be able to continue to operate its businesses. Alternatives        
explored at that time included a sale of business units and the entire Company  
to potentially interested third parties, and obtaining additional debt financing
from the Prepetition Secured Lenders as well as from other lending institutions.
The Company was unable to obtain a proposal from any potential buyer that the   
Company and its Prepetition Secured Lenders believed reflected the fair value of
the businesses, and was unable to obtain a commitment for additional financing  
from any source outside of a Chapter 11 filing. Certain parties in interest     
dispute the adequacy of the Debtors' prepetition efforts to solicit potential   
sale proposals. SEE SECTION XII.B.                                              

                 The only committed financing proposal received by the Debtors
was a proposal for debtor-in-possession financing (the "DIP Facility") from a   
group of lenders (the "DIP Lenders"), many of whom are lenders under the        
Prepetition Senior Secured Credit Facility. The DIP Facility provides for up to 
$350 million of availability, of which $220 million is fully committed and the  
balance is to be made available upon request by the Debtors if sufficient       
commitments can be obtained from lenders. Obligations under the DIP Facility are
secured by first priority liens on substantially all of the Debtors' assets,    
senior to the liens securing the obligations to the Prepetition Secured Lenders.
Borrowing availability and use of funds under the DIP Facility is tied to an    
operating budget agreed to by the Debtors and the DIP Lenders. See SECTION V.C  
for a description of the DIP Facility.                                          

F.       PREPETITION PLAN NEGOTIATIONS AND COMMENCEMENT OF THE CHAPTER 11 CASES 

              As noted above, the Company concluded that the only way to
maintain its going concern value for the benefit of creditors, if a Chapter 11  
filing was to occur, was to seek to complete the Chapter 11 Cases and emerge    
from Chapter 11 as quickly as possible. Doing so is critical for numerous       
reasons, including that it is extremely difficult for the Company to be awarded 
new work while in Chapter 11. The difficulty in obtaining new work from project 
owners is exacerbated by the difficulty in obtaining surety bonds to assure     
project performance while in Chapter 11. Surety bonds are very often required by
project owners.                                                                 

               As a result, in conjunction with negotiations to obtain the
DIP Facility, the Company also conducted negotiations regarding the terms of a  
restructuring plan with the Prepetition Secured Lenders. In fact, the           
Prepetition Secured Lenders and the DIP Lenders conditioned their willingness to
provide the DIP Facility and the requisite consents thereto upon the Debtors    
filing a restructuring plan acceptable to them concurrent with the filing of the
Chapter 11 Cases. The Company also believed that commencing the Chapter 11 Cases
on a prearranged basis would expedite the process, benefitting all creditors.   
Accordingly, the Company negotiated the terms of a restructuring plan with such 
lenders prior to commencing these Chapter 11 Cases. That restructuring plan was 

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filed on May 14, 2001.                                                          

                On May 14, 2001, to obtain the ability to borrow funds under
the DIP Facility and to begin the process of restructuring the Company's balance
sheet, the Chapter 11 Cases were commenced. The Debtors immediately sought      
approval by the Bankruptcy Court of a number of motions designed to provide a   
smooth transition into Chapter 11 for the Debtors and to provide certain        
substantive relief designed to preserve the value of the Debtors' businesses.   
SEE SECTION I.G. This relief included interim approval of the DIP Facility,     
final approval of which was obtained on June 13, 2001.                          

           In addition, at the outset of the Chapter 11 Cases, the
Bankruptcy Court established certain dates designed to result in consummation of
the Debtors' reorganization plan as quickly as practicable. July 24, 2001 was   
set as the date for the Bankruptcy Court to consider approving this Disclosure  
Statement, and September 6, 2001 was set as the date to consider confirmation of
the reorganization plan.                                                        

             Subsequently, the Debtors, the Steering Committee for the
Prepetition Secured Lenders and Mr. Dennis Washington reached an agreement      
regarding continued participation by Mr. Washington in the management of the    
Company and the consideration to be given to Mr. Washington in exchange for his 
agreement to remain with the Company, which agreement is described below and in 
SECTION V.G. As a result, on June 22, 2001, the Debtors filed the First Amended 
Joint Plan of Reorganization, which reflected modifications to the plan as filed
on May 14, 2001, to encompass the agreement with Mr. Washington, but also       
contained a number of open items that at the time remained subject to ongoing   
negotiations. Additional modifications reflecting the results of those ongoing  
negotiations have been incorporated into the Plan.                              

G.       PAYMENT OF CRITICAL VENDOR CLAIMS                                      

            Trade creditors are the lifeblood of the engineering and
construction industry. Accordingly, the Debtors believe that it is critical to  
their ability to maintain operations and going concern value that certain       
"Critical Vendors" be paid in the ordinary course of business. These Critical   
Vendors include subcontractors and vendors that provide goods and services to   
the Debtors with respect to ongoing projects.                                   

                  To preserve the value of the Company's businesses, the Debtors
must continue to pay the Critical Vendors in ordinary course of business, for a 
number of reasons. For example, if the Debtors are unable to pay subcontractors 
and vendors relating to an ongoing project in the ordinary course of business,  
project owners will likely cease paying to the Debtors the payments owing to    
them under their underlying construction contracts. These payments would likely 
be diverted to the subcontractors and vendors directly. Also, subcontractors    
would literally stop working on the Debtors' projects absent payment in full,   
causing defaults by the Debtors and allowing project owners to call on surety   
bonds that assure the Debtors' performance. Doing so would trigger equitable    
subrogation rights of those sureties, which include the right to receive future 
project payments from owners. These events would eliminate the Debtors' ongoing 
revenue stream, crippling operations and destroying enterprise value.           

                 As a result, at the commencement of the Chapter 11 Cases, the
Debtors sought and received authorization from the Bankruptcy Court to continue 
to pay substantially all subcontractors and vendors on ongoing projects in the  
ordinary course of business. SEE SECTION V.B. A list of the Critical Vendors    
that have received payments to date or that are anticipated to receive such     
payments during these Chapter 11 Cases is attached hereto as APPENDIX E, which  
list is as current as practicable as of the date hereof. Total payments under   
the Critical Vendor order entered by the Bankruptcy Court are, as of the date   
hereof, approximately between $160 - $168 million.                              

H.       GENERAL STRUCTURE OF THE PLAN                                          

                 The Plan is premised upon the strategic business plan for the
Company going forward prepared by WGI's management (the "Business Plan"). The   
Business Plan and accompanying pro forma financial projections through fiscal   
year 2004 (the "Projections") are described in detail in SECTION V.L. While the 
Company believes that the Business Plan and Projections are reasonable and      
appropriate, they include a number of assumptions that may differ from actual   
results and are subject to a number of risk factors. SEE SECTIONS V.L.3 AND     
VIII. The Business Plan and Projections for the Company incorporate the         
Company's forecasts of the anticipated business performance of the Non-Debtor   
Subsidiaries.                                                                   

                The Plan provides for WGI's balance sheet to be restructured
by converting the obligations to the Prepetition Secured Lenders to equity, and 
by discharging the unsecured Claims of holders of the Old Notes and other       
general unsecured creditors (the "General Unsecured Claims"). General Unsecured 
Claims include all prepetition unsecured Claims other than Employee Claims.     
Under the Plan, Employee Claims will be Reinstated. The Plan also provides for  
the continued payment in the ordinary course                                    

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of business of Claims authorized to be paid during the Chapter 11 Cases pursuant
to orders entered by the Bankruptcy Court, such as the Claims of Critical       
Vendors.                                                                        

        Under the Plan, WGI will issue New Common Shares for
distribution to the Prepetition Secured Lenders, and the Old Notes and Old      
Common Stock will be cancelled. The distribution under the Plan of 100% of the  
New Common Shares of Reorganized WGI to the Prepetition Secured Lenders is      
premised upon the valuation of the Company prepared by the Debtors' financial   
advisors. See discussion below and SECTION XI.E. That valuation establishes the 
enterprise value of the Company as $555 million, at the midpoint of a range     
(exclusive of the value of claims and causes of action against Raytheon and its 
subsidiaries). Because the amount of funded debt projected by the Debtors to be 
on the Reorganized Debtors' consolidated balance sheet upon emergence from      
Chapter 11 is $50 million, the value of the New Common Shares to be issued under
the Plan, in the aggregate, has been established at approximately $505 million, 
subject to being reduced as a result of the issuance of the Washington Stock    
Options, which are described below.                                             

             The Claims of the Prepetition Secured Lenders exceed $570
million of funded debt, and also include approximately $130 million of          
contingent liabilities for undrawn letters of credit outstanding. Because the   
Prepetition Secured Lenders assert (and the Debtors do not contest) that the    
Prepetition Secured Lenders have liens on assets that comprise substantially all
of the value of the Company, and consistent with the valuation of the Company   
and the New Common Stock described above, under the Plan, (i) the Prepetition   
Secured Lenders' Claims are bifurcated into Secured Lender Claims and Lender    
Deficiency Claims, pursuant to section 506 of the Bankruptcy Code, (ii) the     
Secured Lender Claims are established in an amount equal to the value of the New
Common Shares to be issued and the Prepetition Secured Lenders are to receive   
under the Plan, which is approximately $505 million, which may be adjusted      
downward by the Confirmation Hearing as a result of the issuance of the         
Washington Stock Options (discussed below) and (iii) the Lender Deficiency      
Claims will be established by the Confirmation Hearing, based primarily upon the
amount of the Prepetition Secured Lenders' funded debt at that time minus the   
amount of the Secured Lender Claims.                                            

                  The Creditors' Committee contests that the Prepetition Secured
Lenders have liens on assets that comprise substantially all of the value of the
Debtors' businesses. The Creditors' Committee has filed a complaint to require  
the Senior Secured Lenders to establish the extent and validity of their liens. 
The Creditors' Committee also asserts that the valuation of the Company is      
higher than the valuation prepared by the Debtors' financial advisors. SEE      
SECTION XI.E. The Debtors and the Senior Secured Lenders dispute the Creditors' 
Committee's contentions.                                                        

            In addition, the Plan (i) provides for a trust (the "WGI
Creditor Trust") to be created to which substantially all claims and causes of  
action against Raytheon and its affiliates, agents and\or representatives,      
including the claims and causes of action to be asserted under sections 544,    
547, 548, 550 or any other section of the Bankruptcy Code (the "Raytheon        
Claims"), will be assigned and which will be funded with $20 million in cash to 
pursue such claims and (ii) provides for holders of General Unsecured Claims    
(which include, without limitation, the Lender Deficiency Claims, Old Note      
Claims, and any Claims asserted by Raytheon or its subsidiaries to the extent   
Allowed and not subordinated) to receive WGI Creditor Trust recoveries, if any, 
after repayment to Reorganized WGI of the $20 million funding advance, with     
interest at the rate of 20% per annum, compounded quarterly. As discussed above 
and in SECTION V.I.1, the Debtors assert substantial claims against Raytheon and
contest the validity and enforceability of all claims asserted by Raytheon      
against the Debtors. Any WGI Creditor Trust assets remaining after payment of   
all trust expenses, repayment of the $20 million funding advance (with interest)
and payment in full of all General Unsecured Claims (with interest from the     
Petition Date to the date of payment), if any (the "WGI Creditor Trust Equity   
Residual"), will be distributed pro rata to holders of Old Common Stock and     
other Allowed Claims (if any) in Class 8.                                       

                The Plan is premised on the substantive consolidation of the
Debtors only with respect to the treatment of Class 6 and 7 Claims for voting,  
confirmation and distribution purposes. SEE SECTION VI.B. Certain parties have  
stated that they may oppose, and Mitsubishi has stated that it will oppose, the 
substantive consolidation proposed under the Plan on the grounds that they      
believe that certain creditors may be adversely affected by such substantive    
consolidation including creditors that hold a claim against a single Debtor or, 
that substantive consolidation is improper under the circumstances. These       
situations may be fact specific. The Debtors do not believe that the substantive
consolidation proposed in the Plan will negatively impact creditor recoveries.  
The Bankruptcy Court will hear any objections to the substantive consolidation  
proposed in the Plan at the Confirmation Hearing. Therefore, any creditor who   
opposes the substantive consolidation proposed under the Plan must file an      
objection to the Plan or enter into an agreement with the Debtors reserving     
their rights prior to the Confirmation Hearing. See SECTION II.E for            
instructions as to how to file an objection to the Plan.                        

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I.       NEGOTIATIONS AND AGREEMENT WITH MR. DENNIS WASHINGTON                  

                 As set forth above and in SECTION III.B.1 , approximately 39%
of the Old Common Stock is held by Mr. Dennis Washington. Mr. Washington is     
Chairman of WGI's board of directors and as of the Petition Date was WGI's Chief
Executive Officer. Under the Plan, the Old Common Stock will be cancelled, and  
no distributions will be made to the holders thereof, other than, potentially,  
the WGI Creditor Trust Equity Residual.                                         

                  The Steering Committee for the Prepetition Secured Lenders and
the Debtors believe that Mr. Washington's continued involvement in managing the 
Company's businesses will be highly beneficial to these estates and the         
Company's future prospects. Mr. Washington has a long history of involvement in 
construction and other industries, and has been Chairman of WGI since September,
1996. Mr. Washington's reputation and contacts in the industry have been        
instrumental in the Company being awarded numerous significant contacts.        

               Accordingly, after the Chapter 11 Cases were commenced, the
Steering Committee for the Prepetition Secured Lenders and Mr. Washington began 
negotiations regarding Mr. Washington's involvement with the Company during the 
Chapter 11 Cases and after the Effective Date. At the outset, Mr. Washington    
indicated that he was not interested in continuing to be involved with the      
Company unless he could acquire an economic stake in the reorganized Company.   

             As a result of these negotiations, Mr. Washington and the
Steering Committee for the Prepetition Secured Lenders reached agreement on     
terms and conditions for Mr. Washington to render ongoing services to the       
Company, and the consideration to be provided to Mr. Washington in exchange for 
his agreement to remain with the Company (the "Washington Agreement"). The      
Debtors support that agreement, which is embodied in the Plan.                  

               The principal terms of the Washington Agreement provide for
Mr. Washington to continue as Chairman of WGI and to remain as Chairman of      
Reorganized WGI's Board of Directors for at least two years after the Effective 
Date, without compensation. Mr. Washington will be granted, on the Effective    
Date, options to acquire New Common Shares in amounts aggregating 15% of the    
total outstanding New Common Shares (on a fully diluted basis) (the "Washington 
Stock Options"). The Washington Stock Options are divided into three tranches,  
with each tranche comprised of options to purchase 5% of the New Common Shares  
outstanding, at different strike prices. One third of each tranche of the       
Washington Stock Options vest on the Effective Date, and one-third vest of each 
tranche vests on each of the first two anniversaries of the Effective Date. A   
full description of the terms and conditions of the Washington Stock Options, as
well as other components of the Washington Agreement, is set forth in SECTION   
V.G of the Plan. Lazard has calculated the value of the Washington Stock        
Options, based upon a Black-Scholes analysis, to be between $35 million and $40 
million. Certain creditors have reserved their right to dispute this valuation. 

                Importantly, and as described in SECTION V.G, the Washington
Agreement includes provision for a cash payment to Mr. Washington if the Debtors
sell substantially all of their assets prior to consummation of the Plan, and   
for the Washington Stock Options to vest immediately if the Company enters into 
an agreement before consummation of the Plan to sell certain material assets.   
SEE SECTION V.G.                                                                

        Finally, as discussed in SECTION V.G, as part of the
Washington Agreement, Mr. Washington agreed to participate in the DIP Facility  
by providing a commitment for $10 million on the same terms as the other DIP    
Lenders except that Mr. Washington will not participate in lender calls and is  
not entitled to vote on matters requiring 100% lender approval.                 

J.       SUMMARY OF TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN            

                 As contemplated by the Bankruptcy Code, Administrative Claims
and Priority Tax Claims are not classified under the Plan. Under the Plan,      
Allowed Administrative Claims are to be paid in full on the Effective Date, or, 
for ordinary course Administrative Claims, when such claims become due. See     
SECTION VI.C.1 for a summary of the treatment proposed under the Plan for       
Administrative Claims and Priority Tax Claims.                                  

              The estimated amount of non-ordinary course Administrative
Claims to be incurred during the Chapter 11 Cases (which are primarily comprised
of professional fees and which will be paid, in part, during the Chapter 11     
Cases pursuant to Bankruptcy Court orders), is approximately $20 million, and   
the estimated amount of Priority Tax Claims is $18 to $20 million.              

                  The table below summarizes the classification and treatment of
the prepetition Claims and Interests under the Plan. For certain classes of     
Claims, estimated percentage recoveries are also set forth. Estimated percentage
recoveries have been estimated based upon a review by the Debtors' management of
the books and records, as well as a number of assumptions, including the value  

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of the New Securities to be issued under the Plan.                              

                 Based, in part, on information provided to it by the Company,
Lazard Freres & Co. LLC ("Lazard"), the investment banker for the Company, has  
evaluated the enterprise value of the Company (exclusive of claims against      
Raytheon and its subsidiaries). Lazard's valuation establishes that the value of
the Company on a going concern basis is between $470 and $640 million, with a   
midpoint of $555 million. As discussed above, this midpoint value is less than  
the amount of funded debt owed to the Prepetition Secured Lenders. Because the  
amount of funded debt of the Company projected on its pro forma consolidated    
balance sheet upon emergence from Chapter 11 is $50 million, Lazard has valued  
the New Common Shares to be issued under the Plan, in the aggregate, at         
approximately $505 million, subject to downward adjustment as a result of the   
Washington Stock Options. The valuation is based upon numerous assumptions,     
including, among other things, an assumption that the operating results         
projected for Reorganized WGI will be achieved in all material respects,        
including revenue growth and improvements in operating margins, earnings and    
cash flow. The valuation assumptions also consider, among other matters, (i)    
market valuation information concerning certain publicly traded equity          
securities of certain other companies that are considered relevant, (ii) certain
general economic and industry information considered relevant to the business of
Reorganized WGI and (iii) such other investigations and analyses deemed         
necessary or appropriate. The Debtors and Lazard believe these valuation        
assumptions are reasonable. THE VALUATION ASSUMPTIONS ARE NOT A PREDICTION OR   
REFLECTION OF POST-CONFIRMATION TRADING PRICES OF THE NEW COMMON SHARES OR ANY  
OTHER SECURITIES. SUCH SECURITIES MAY TRADE AT SUBSTANTIALLY HIGHER OR LOWER    
PRICES BECAUSE OF A NUMBER OF FACTORS, INCLUDING THOSE DISCUSSED IN SECTION     
VIII. THE TRADING PRICES OF SECURITIES ISSUED UNDER A PLAN OF REORGANIZATION ARE
SUBJECT TO MANY UNFORESEEABLE CIRCUMSTANCES AND THEREFORE CANNOT BE PREDICTED.  

             Solely for purposes of estimating potential recoveries to
holders of Claims in Class 7, it has been assumed that there will be no recovery
from Raytheon or its subsidiaries pursuant to the Raytheon Claims, and thus that
there will be no proceeds paid to creditors from the WGI Creditor Trust. This   
assumption has been made because of the inherently uncertain nature of          
estimating recoveries from ongoing litigation. The Debtors believe that the     
Raytheon Claims are valid and that such litigation will be successful, although 
there can be no assurance of any result in such litigation and it is possible   
that there will not be any recoveries obtained from Raytheon or its             
subsidiaries. Raytheon disputes that the Raytheon Claims have value. Also, for  
certain Classes of Claims, the actual amounts of Allowed Claims could materially
exceed or could be materially less than the estimated amounts shown in the table
that follows. The Debtors do not anticipate having reviewed and full analyzed   
all proofs of claim filed in these cases by the Confirmation Date. Estimated    
Claim amounts for each Class set forth below are based upon the Debtors' review 
of their books and records, and includes estimates of a number of Claims that   
are contingent, disputed and/or unliquidated. SEE SECTION VI.D.2. Accordingly,  
for these reasons, no representation can be or is being made with respect to    
whether the estimated percentage recoveries shown in the table below will       
actually be realized by the holders of Allowed Claims in any particular Class.  

                                                                [Download Table]

CLASS DESCRIPTION                       TREATMENT UNDER PLAN                    
-----------------                       --------------------                    

                                                                                
CLASS 1 -   OTHER PRIORITY CLAIMS       Class 1 consists of all Claims entitled 
                                        to priority pursuant to section 507(a)  
Estimated Allowed Claims:               of the Bankruptcy Code other than DIP   
Less than $5 million.                   Facility Claims, Priority Tax Claims or 
                                        Administrative Claims.                  

                                        Under the Plan, on or as soon as        
                                        reasonably practicable after, the latest
                                        of (i) the Distribution Date, (ii) the  
                                        date such Class 1 Claim becomes an      
                                        Allowed Class 1 Claim, or (iii) the date
                                        such Class 1 Claim becomes payable      
                                        pursuant to any agreement between a     
                                        Debtor and the holder of such Class 1   
                                        Claim, each holder of an Allowed Class 1
                                        Claim will receive in full satisfac     
                                        tion, settlement, release and discharge 
                                        of and in exchange for such Allowed     
                                        Class 1 Claim (a) Cash equal to the     
                                        unpaid portion of such Allowed Class 1  
                                        Claim or (b) such other treatment as to 
                                        which a Debtor and such holder shall    
                                        have agreed upon in writing. CLASS 1    
                                        CLAIMS ARE UNIMPAIRED AND THEREFORE NOT 
                                        ENTITLED TO VOTE ON THE PLAN. ESTIMATED 
                                        PERCENTAGE RECOVERY: 100%.              

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                                                                [Download Table]

CLASS DESCRIPTION                       TREATMENT UNDER PLAN                    
-----------------                       --------------------                    

                                                                                
CLASS 2 -   OTHER SECURED CLAIMS        Class 2 consists of separate subclasses 
                                        of claims that are secured by a lien    
                                        upon property in which the Estate has an
Estimated Allowed Claims:               interest, to the extent of the value of 
Less than $5 million.                   the Claim holders' interest in the      
                                        Estate's interest in such property, as  
                                        determined pursuant to section 506(a) of
                                        the Bankruptcy Code against the Debtors,
                                        other than the Secured Lender Claims    
                                        included in Class 6 below ("Other       
                                        Secured Claims").                       

                                        Each subclass is deemed to be a separate
                                        class for all purposes under the        
                                        Bankruptcy Code.                        

                                        On the Effective Date, the legal,       
                                        equitable and contractual rights of     
                                        holders of an Allowed Class 2 Claim     
                                        shall be Reinstated, subject to the     
                                        provisions of ARTICLE VII of the Plan.  
                                        The Debtors' failure to object to any   
                                        such Class 2 Claims in the Chapter 11   
                                        Cases shall be without prejudice to the 
                                        rights of WGI or the Reorganized Debtors
                                        to contest or otherwise defend against  
                                        such Claim in the appropriate forum when
                                        and if such Claim is sought to be       
                                        enforced by the Other Secured Claim     
                                        holder. Notwithstanding section 1141(c) 
                                        or any other provision of the Bankruptcy
                                        Code, all prepetition liens on property 
                                        of any Debtor held by or on behalf of   
                                        the Other Secured Claim holders with    
                                        respect to such Claims shall survive the
                                        Effective Date and continue in          
                                        accordance with the contractual terms of
                                        the underlying agreements with such     
                                        Claim holders until, as to each such    
                                        Claim holder, the Allowed Claims of such
                                        Other Secured Claim holder are paid in  
                                        full, subject to the provisions of      
                                        ARTICLE VII of the Plan. CLASS 2 CLAIMS 
                                        ARE UNIMPAIRED AND THERE FORE NOT       
                                        ENTITLED TO VOTE ON THE PLAN. ESTIMATED 
                                        PERCENTAGE RECOVERY: 100%.              

CLASS 3 -   UNIMPAIRED UNSECURED        Class 3 consists of unsecured Claims of 
            CLAIMS                      any of the Debtors' employees as of the 
                                        Petition Date other than Claims arising 
Estimated Allowed Claims:               as a result of the assumption of any    
Less than $5 million.                   contract or agreement or rejection of   
                                        any contract or agreement specifically  
                                        listed on SCHEDULE 6.3 of the Plan, or  
                                        any tort claims of such employees.      

                                        Under the Plan, each holder of an       
                                        Allowed Class 3 Claim shall have its    
                                        Claim Reinstated. CLASS 3 CLAIMS ARE    
                                        UNIMPAIRED AND THEREFORE NOT ENTITLED TO
                                        VOTE ON THE PLAN. ESTIMATED PERCENTAGE  
                                        RECOVERY: 100%.                         

CLASS 4 -   INTERCOMPANY CLAIMS         Class 4 consists of, as the case may be,
                                        any Claim (a) by a Debtor against       
                                        another Debtor or (b) by a Non-Debtor   
                                        Subsid iary against a Debtor.           

                                        Under the Plan and except as provided   
                                        therein, each holder of an Allowed Class
                                        4 Claim shall have its Claim Reinstated.
                                        CLASS 4 CLAIMS ARE UNIMPAIRED AND       
                                        THEREFORE NOT ENTITLED TO VOTE ON THE   
                                        PLAN. ESTIMATED PERCENTAGE RECOVERY:    
                                        100%.                                   

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CLASS DESCRIPTION                       TREATMENT UNDER PLAN                    
-----------------                       --------------------                    

                                                                                
CLASS 5 -   SUBSIDIARY INTERESTS        Class 5 consists of the issued and      
                                        outstanding shares of stock of the      
                                        subsidiaries directly or indirectly     
                                        owned by WGI, as of the Petition Date.  
                                        Under the Plan, subject to the          
                                        Restructuring Transactions (if any), all
                                        Class 5 Interests will be Reinstated.   
                                        CLASS 5 INTERESTS ARE UNIMPAIRED AND    
                                        THEREFORE NOT ENTITLED TO VOTE ON THE   
                                        PLAN. ESTIMATED PERCENTAGE RECOVERY:    
                                        100%.                                   

CLASS 6 -   SECURED LENDER CLAIMS       Class 6 consists of all Secured Claims  
                                        of the Prepetition Secured Lenders      
Allowed Claims:                         arising under or as a result of the     
                                        Prepetition Senior Secured Credit       
Approximately $505 million, subject to  Facility, which Claims will be deemed   
downward adjustment as a result of the  Allowed pursuant to the Plan in the     
Washington Stock Options                amount of approximately $505 million,   
                                        subject to downward adjustment as a     
                                        result of the Washington Stock Options. 

                                        Under the Plan, on the Effective Date,  
                                        each holder of an Allowed Class 6 Claim,
                                        in full satisfaction, settlement,       
                                        release, and discharge of and in        
                                        exchange for such Allowed Class 6 Claim,
                                        will receive on or as soon as           
                                        practicable after the Distribution Date,
                                        its Pro Rata share of one-hundred       
                                        percent (100%) of the New Common Shares 
                                        issued and outstanding as of the        
                                        Effective Date, subject to Dilution.    
                                        CLASS 6 CLAIMS ARE IMPAIRED AND ENTITLED
                                        TO VOTE ON THE PLAN. ESTIMATED          
                                        PERCENTAGE RECOVERY: 100%.              

CLASS 7 -   GENERAL UNSECURED CLAIMS    Class 7 consists of any Claim against   
                                        the Debtors that is not a DIP Facility  
Estimated Allowed Claims:               Claim, Administrative Claim, Priority   
$650 million to $1.1 billion            Tax Claim, Other Priority Claim, Other  
(excluding any Claims                   Secured Claim, Intercompany Claim,      
asserted by Raytheon or its             Secured Lender Claim or Unimpaired      
subsidiaries, all of which are          Unsecured Claim, and includes, without  
disputed by the Debtors)                limitation, the Lender Deficiency       
                                        Claims, the Old Note Claims and the     
                                        Raytheon Asserted Claims (if any).      

                                        Under the Plan, each holder of an       
                                        Allowed Class 7 Claim shall receive in  
                                        full satisfaction, settlement, release  
                                        and discharge of and in exchange for    
                                        such Allowed Class 7 Claim, a beneficial
                                        pro rata interest in the WGI Creditor   
                                        Trust, and shall be entitled to receive 
                                        pro rata distributions from the WGI     
                                        Creditor Trust pursuant to the terms and
                                        conditions set forth in SECTION 9.7 of  
                                        the Plan and the WGI Creditor Trust     
                                        Agreement until such Claim is paid in   
                                        full plus interest accruing from the    
                                        Petition Date until the date payment is 
                                        made, at a rate of 20% per annum,       
                                        compounded quarterly. CLASS 7 CLAIMS ARE
                                        IMPAIRED AND ENTITLED TO VOTE ON THE    
                                        PLAN. ESTIMATED PERCENTAGE RECOVERY: 0% 

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CLASS DESCRIPTION                       TREATMENT UNDER PLAN                    
-----------------                       --------------------                    

                                                                                
CLASS DESCRIPTION                       Treatment Under Plan Class 8 consists of
CLASS 8 - WGI INTERESTS AND             all WGI Interests and all Subordinated  
SUBORDINATED CLAIMS                     Claims. Under the Plan, the holders of  
                                        such Claims or Interests shall not      
                                        receive or retain any property on       
                                        account of such Claim or Interests,     
                                        except for a distribution of the WGI    
                                        Creditor Trust Equity Residual, if any. 
                                        On the Effective Date, all of the WGI   
                                        Interests shall be deemed cancelled and 
                                        extinguished. CLASS 8 INTERESTS AND     
                                        SUBORDINATED CLAIMS ARE IMPAIRED AND    
                                        WILL RECEIVE NO DISTRIBUTION UNDER THE  
                                        PLAN (EXCEPT FOR A DISTRIBUTION OF THE  
                                        WGI CREDITOR TRUST EQUITY RESIDUAL, IF  
                                        ANY) AND ARE THEREFORE DEEMED TO REJECT 
                                        THE PLAN AND ARE NOT ENTITLED TO VOTE ON
                                        THE PLAN. ESTIMATED PERCENTAGE RECOVERY:
                                        0%.                                     

    As of the date hereof, the Plan is not supported by the Creditors'
Committee. Negotiations among the Debtors, the Prepetition Secured Lenders and  
the Creditors' Committee are ongoing. If a settlement among those parties is    
reached, it is possible that the Plan will be modified, pursuant to section 1127
of the Bankruptcy Code and Bankruptcy Rule 3019, to incorporate such a          
settlement. In that case, the Debtors intend seek a determination by the        
Bankruptcy Court that the solicitation of votes on the Plan pursuant to this    
Disclosure Statement applies to the Plan as so modified, and that a             
resolicitation of votes from holders of Claims in Class 7 is not required, as   
authorized by Bankruptcy Rule 3019.                                             

         THE DEBTORS BELIEVE THAT THE PLAN PROVIDES THE BEST RECOVERIES POSSIBLE
FOR HOLDERS OF CLAIMS AGAINST THE DEBTORS AND THUS STRONGLY RECOMMEND THAT YOU  
VOTE TO ACCEPT THE PLAN.                                                        

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 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]

                                                                                                                                PAGE
                                                                                                                                ----

                                                                                                                                    
TABLE OF APPENDICES..........................................................................................................-XVIII-

I.  INTRODUCTION...................................................................................................................1

II.    PLAN VOTING INSTRUCTIONS AND PROCEDURES.....................................................................................1
         A.       DEFINITIONS......................................................................................................1
         B.       NOTICE TO HOLDERS OF CLAIMS AND INTERESTS........................................................................1
         C.       SOLICITATION PACKAGE.............................................................................................2
         D.       VOTING PROCEDURES, BALLOTS AND VOTING DEADLINE...................................................................2
         E.       CONFIRMATION HEARING AND DEADLINE FOR OBJECTIONS TO CONFIRMATION.................................................3

III.  HISTORY AND STRUCTURE OF THE DEBTORS.........................................................................................3
         A.       OVERVIEW OF BUSINESS OPERATIONS..................................................................................3
                           1.       DESCRIPTION OF THE COMPANY'S BUSINESSES........................................................3
                           2.       BRIEF HISTORY..................................................................................3
                           3.       PREPETITION FINANCIAL RESULTS..................................................................4
         B.       CAPITAL STRUCTURE OF THE COMPANY.................................................................................8
                           1.       EQUITY.........................................................................................8
                           2.       THE PREPETITION SENIOR SECURED CREDIT FACILITY.................................................8
                           3.       UNSECURED DEBENTURES...........................................................................9
         C.       CORPORATE STRUCTURE OF THE COMPANY...............................................................................9
                           1.       CURRENT CORPORATE STRUCTURE....................................................................9
                           2.       BOARD OF DIRECTORS............................................................................10
                           3.       SENIOR OFFICERS...............................................................................11

IV.  EVENTS LEADING TO COMMENCEMENT OF THE CHAPTER 11 CASES.......................................................................12
         A.       THE RAYTHEON TRANSACTION........................................................................................12
         B.       LIQUIDITY ISSUES................................................................................................13
         C.       NEGOTIATIONS WITH PREPETITION SECURED LENDERS...................................................................13

V.  CHAPTER 11 CASES..............................................................................................................13
         A.       CONTINUATION OF BUSINESS; STAY OF LITIGATION....................................................................13
         B.       FIRST DAY ORDERS ...............................................................................................14
         C.       DEBTOR IN POSSESSION FINANCING .................................................................................15
                           1.       THE DIP FACILITY..............................................................................15
                           2.       AUTHORIZATION TO USE CASH COLLATERAL..........................................................15
                           3.       EXIT FINANCING................................................................................16
         D.       APPOINTMENT OF CREDITORS' COMMITTEE.............................................................................16
                           1.       EMPLOYEE RETENTION PROGRAM AND CONTINUANCE OF PTO PROGRAM.....................................16
                           2.       INTERIM ARRANGEMENTS REGARDING RED OAK AND ILIJAN PROJECTS....................................17
                           3.       EXTENSION OF TIME TO ASSUME OR REJECT UNEXPIRED LEASES........................................18
                           4.       POSTPETITION BONDING FACILITY.................................................................18
         F.       APPOINTMENT OF AN EXAMINER......................................................................................18
         G.       NEGOTIATIONS AND AGREEMENT WITH MR. WASHINGTON..................................................................19
                           1.       GRANT OF WASHINGTON STOCK OPTIONS.............................................................19
                           2.       EARLY VESTING OF WASHINGTON STOCK OPTIONS.....................................................20
                           3.       PAYMENT UPON SALE OF ASSETS...................................................................20
                           5.       BOARD, MANAGEMENT AND RELATED MATTERS.........................................................20
                           6.       PARTICIPATION IN THE DIP FACILITY.............................................................20
                           7.       PERMITTED ACCUMULATION OF ADDITIONAL EQUITY...................................................20

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H.       SUMMARY OF CLAIMS PROCESS AND BAR DATE ..................................................................................21
                           1.       SCHEDULES AND STATEMENTS OF FINANCIAL AFFAIRS.................................................21
                           2.       CLAIMS BAR DATE AND PROOFS OF CLAIM...........................................................21
         I.       SUMMARY OF MATERIAL LITIGATION MATTERS..........................................................................21
                           1.       CLAIMS AGAINST RAYTHEON.......................................................................22
                           2.       MITSUBISHI LITIGATION.........................................................................23
         J.       FOREIGN ACTIONS.................................................................................................23
         K.       MOTION OF THE CREDITORS' COMMITTEE TO TERMINATE THE DEBTORS' EXCLUSIVE PERIOD TO                                  
                  FILE AND SOLICIT ACCEPTANCES OF THE PLAN........................................................................23
         L.       DEVELOPMENT AND SUMMARY OF THE BUSINESS PLAN....................................................................24
                           1.       SUMMARY OF THE BUSINESS PLAN..................................................................24
                           2.       FINANCIAL HIGHLIGHTS..........................................................................30
                           3.       PRINCIPAL ASSUMPTIONS UNDERLYING THE PROJECTIONS..............................................31

VI.  SUMMARY OF THE PLAN OF REORGANIZATION........................................................................................33
         A.       OVERALL STRUCTURE OF THE PLAN...................................................................................33
         B.       SUBSTANTIVE CONSOLIDATION FOR PURPOSES OF TREATING IMPAIRED CLAIMS..............................................34
         C.       CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS............................................................35
                           1.       TREATMENT OF UNCLASSIFIED CLAIMS UNDER THE PLAN...............................................36
                                            a.       DIP FACILITY CLAIMS..........................................................36
                                            b.       ADMINISTRATIVE CLAIMS........................................................36
                                            c.       PRIORITY TAX CLAIMS..........................................................36
                           2.       TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS UNDER THE PLAN...................................37
                                            a.       UNIMPAIRED CLASSES OF CLAIMS.................................................37
                                            b.       IMPAIRED CLAIMS AND INTERESTS................................................38
                           3.       RESERVATION OF RIGHTS REGARDING CLAIMS........................................................38
                           4.       RAYTHEON ASSERTED CLAIMS......................................................................38
         D.       DISTRIBUTIONS UNDER THE PLAN....................................................................................39
                           1.       DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE.....................................39
                                            a.       DISTRIBUTION DATE............................................................39
                                            b.       RECORD DATE FOR DISTRIBUTIONS TO HOLDERS OF                                    
                                                     SECURED LENDER CLAIMS AND OLD NOTES..........................................39
                                            c.       CALCULATION OF DISTRIBUTION AMOUNTS OF NEW COMMON SHARES.....................39
                                            d.       DELIVERY OF DISTRIBUTIONS....................................................40
                                            e.       OLD NOTES....................................................................40
                                            f.       LOST, MUTILATED OR DESTROYED OLD NOTES.......................................40
                                            g.       FAILURE TO SURRENDER CANCELED OLD NOTES......................................40
                           2.       RESOLUTION AND TREATMENT OF DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS AND DISPUTED          
                                    INTERESTS.....................................................................................40
                                            a.       PROSECUTION OF OBJECTIONS....................................................40
                                            b.       NO DISTRIBUTIONS PENDING ALLOWANCE...........................................41
                                            c.       DISPUTED DISTRIBUTION RESERVE; RESERVE FOR SUBSEQUENT                          
                                                     DISTRIBUTIONS TO QUALIFYING CLASS 7 CREDITORS................................41
                                            d.       DISTRIBUTIONS AFTER ALLOWANCE OF CLASS 7 CLAIMS..............................41
         E.       POST-CONSUMMATION OPERATIONS OF THE DEBTORS.....................................................................41
                           1.       CONTINUED CORPORATE EXISTENCE.................................................................41
                           2.       CANCELLATION OF OLD SECURITIES AND AGREEMENTS.................................................41
                           3.       CERTIFICATES OF INCORPORATION AND BYLAWS......................................................41
                           4.       RESTRUCTURING TRANSACTIONS....................................................................41
         F.       SUMMARY OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN..................................................42
                           1.       NEW COMMON SHARES.............................................................................42
                           2.       REGISTRATION RIGHTS AGREEMENT.................................................................42

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         G.       EXIT FACILITY...................................................................................................42
         H.       SUMMARY OF RELEASES UNDER THE PLAN..............................................................................43
                           1.       RELEASES BY DEBTORS...........................................................................43
                           2.       RELEASES BY HOLDERS OF LENDER CLAIMS..........................................................43
                           3.       INJUNCTION RELATED TO RELEASES................................................................44
         I.       COMPENSATION AND BENEFIT PROGRAMS...............................................................................44
         J.       DIRECTORS AND OFFICERS OF REORGANIZED DEBTORS...................................................................44
                           1.       APPOINTMENT...................................................................................44
                           2.       TERMS.........................................................................................44
                           3.       VACANCIES.....................................................................................44
                           4.       TREATMENT OF DIRECTOR AND OFFICER INDEMNIFICATION OBLIGATIONS UNDER THE PLAN..................45
         K.       REVESTING OF ASSETS.............................................................................................45
         L.       PRESERVATION OF RIGHTS OF ACTION................................................................................45
         M.       OTHER MATTERS...................................................................................................45
                           1.       TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.........................................45
                                            a.       ASSUMED CONTRACTS AND LEASES.................................................46
                                            b.       PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES.......................46
                                            c.       REJECTED CONTRACTS AND LEASES................................................46
                                            d.       REJECTION DAMAGES BAR DATE...................................................46
                           2.       SPECIAL PROVISIONS FOR WARRANTY AND INDEMNITY OBLIGATIONS                                       
                                    ARISING OUT OF COMPLETED PROJECTS.............................................................47
                           3.       ADMINISTRATIVE CLAIMS.........................................................................47
                           4.       PROFESSIONAL FEE CLAIMS.......................................................................47
                           5.       WITHHOLDING AND REPORTING REQUIREMENTS........................................................47
                           6.       SETOFFS.......................................................................................47
                           7.       CONTINUATION OF CERTAIN ORDERS................................................................48
         N.       CONFIRMATION AND/OR CONSUMMATION................................................................................48
                           1.       REQUIREMENTS FOR CONFIRMATION OF THE PLAN.....................................................48
                           2.       CONDITIONS TO CONFIRMATION AND CONSUMMATION...................................................49
                                            a.       CONDITIONS TO CONFIRMATION...................................................49
                                            b.       CONDITIONS TO EFFECTIVE DATE.................................................49
                                            c.       WAIVER OF CONDITIONS.........................................................49
         O.       EFFECTS OF CONFIRMATION.........................................................................................50
                           1.       BINDING EFFECT................................................................................50
                           2.       DISCHARGE OF THE DEBTORS......................................................................50
                           3.       PERMANENT INJUNCTION..........................................................................50
                           4.       EXCULPATION AND LIMITATION ON LIABILITY; INDEMNITY............................................51
         P.       RETENTION OF JURISDICTION.......................................................................................51
         Q.       PAYMENT OF STATUTORY FEES.......................................................................................52

VII.  WGI CREDITOR TRUST..........................................................................................................52
         A.       APPOINTMENT OF TRUSTEE..........................................................................................52
         B.       TRANSFER OF TRUST ASSETS TO THE WGI CREDITOR TRUST..............................................................52
         C.       THE WGI CREDITOR TRUST..........................................................................................53
         D.       THE TRUST ADVISORY BOARD........................................................................................53
         E.       FUNDING OF THE WGI CREDITOR TRUST...............................................................................54
         F.       REIMBURSEMENT OBLIGATION........................................................................................54
         G.       DISTRIBUTIONS OF TRUST ASSETS...................................................................................54

VIII.  CERTAIN FACTORS TO BE CONSIDERED...........................................................................................54
         A.       GENERAL CONSIDERATIONS..........................................................................................54
         B.       CERTAIN BANKRUPTCY CONSIDERATIONS...............................................................................55
                           1.       FAILURE TO CONFIRM OR CONSUMMATE THE PLAN.....................................................55
                           2.       DISRUPTION OF OPERATIONS DUE TO THE FILING OF THE CHAPTER 11 CASES............................55
         C.       INHERENT UNCERTAINTY OF FINANCIAL PROJECTIONS...................................................................55

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         D.       INTEGRATION ISSUES..............................................................................................56
         E.       LACK OF ESTABLISHED MARKET FOR THE NEW SECURITIES...............................................................56
         F.       RESTRICTED RESALE OF THE NEW SECURITIES.........................................................................56
         G.       ENVIRONMENTAL MATTERS...........................................................................................57
         H.       UNIMPAIRED AND UNKNOWN CLAIMS...................................................................................57
         I.       INDUSTRY CYCLICALITY............................................................................................57
         J.       BUSINESS AND COMPETITION........................................................................................57
         K.       GOVERNMENT CONTRACTS............................................................................................58
         L.       FIXED PRICE CONTRACTS AND OTHER PROJECT RISKS...................................................................58
         M.       INTERNATIONAL OPERATIONS........................................................................................58
         N.       BONDING.........................................................................................................59
         O.       RELIANCE ON KEY PERSONNEL.......................................................................................59
         P.       CERTAIN LITIGATION .............................................................................................59

IX.  APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS...........................................................................60
         A.       OFFER AND SALE OF NEW SECURITIES, PURSUANT TO THE PLAN:  BANKRUPTCY CODE                                          
                  EXEMPTION FROM REGISTRATION REQUIREMENTS........................................................................60
         B.       SUBSEQUENT TRANSFERS OF NEW SECURITIES..........................................................................60
                           1.       FEDERAL SECURITIES LAWS: SECTION 1145(C) OF THE BANKRUPTCY CODE...............................60
                           2.       SUBSEQUENT TRANSFERS OF NEW COMMON SHARES UNDER STATE SECURITIES LAWS.........................61

X.  INCOME TAX CONSEQUENCES OF THE PLAN...........................................................................................61
         A.       FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTORS..................................................................61
                           1.       CANCELLATION OF INDEBTEDNESS INCOME...........................................................61
                           2.       NET OPERATING LOSSES AND OTHER ATTRIBUTES.....................................................62
                           3.       FEDERAL ALTERNATIVE MINIMUM TAX...............................................................63
         B.       FEDERAL INCOME TAX CONSEQUENCES TO CLAIM HOLDERS................................................................63
                           1.       UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.................................................63
                                            a.       GENERAL......................................................................63
                                            b.       MARKET DISCOUNT..............................................................63
                                            c.       REORGANIZATION TREATMENT.....................................................63
                           2.       NON-UNITED STATES PERSONS.....................................................................64
                           3.       INFORMATION REPORTING AND BACKUP WITHHOLDING..................................................64
         C.       UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE WGI CREDITOR TRUST.........................................65
         D.       IMPORTANCE OF OBTAINING PROFESSIONAL TAX ASSISTANCE.............................................................65

XI.  FEASIBILITY OF THE PLAN AND BEST INTERESTS OF CREDITORS......................................................................65
         A.       FEASIBILITY OF THE PLAN.........................................................................................65
         B.       ACCEPTANCE OF THE PLAN..........................................................................................66
         C.       BEST INTERESTS TEST.............................................................................................66
         D.       LIQUIDATION ANALYSIS............................................................................................67
         E.       VALUATION OF THE REORGANIZED DEBTORS............................................................................67
                           1.       REORGANIZED COMPANY...........................................................................68
                           2.       SUMMARY OF FINANCIAL ANALYSIS.................................................................69
         F.       APPLICATION OF THE "BEST INTERESTS" OF CREDITORS TEST TO THE LIQUIDATION ANALYSIS AND THE VALUATION.............70
         G.       CONFIRMATION WITHOUT ACCEPTANCE OF ALL IMPAIRED CLASSES: THE "CRAMDOWN" ALTERNATIVE.............................70

XII.  ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN...................................................................71
         A.       ALTERNATIVE PLAN(S) OF REORGANIZATION...........................................................................71
         B.       LIQUIDATION UNDER CHAPTER 7 OR CHAPTER 11.......................................................................71

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XIII.  THE SOLICITATION; VOTING PROCEDURE.........................................................................................72
         A.       PARTIES IN INTEREST ENTITLED TO VOTE............................................................................72
         B.       CLASSES IMPAIRED UNDER THE PLAN.................................................................................72
         C.       WAIVERS OF DEFECTS, IRREGULARITIES, ETC.........................................................................72
         D.       WITHDRAWAL OF BALLOTS; REVOCATION...............................................................................72
         E.       FURTHER INFORMATION; ADDITIONAL COPIES..........................................................................73
         F.       INTERNET ACCESS TO BANKRUPTCY COURT DOCUMENTS...................................................................73

XIV.  RECOMMENDATION AND CONCLUSION...............................................................................................74


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 TABLE OF APPENDICES

APPENDIX                           NAME                       
--------                           ----                       

     Appendix A           Second Amended Joint Plan of Reorganization of
                        Washington Group International, Inc., et al.

Appendix B           Liquidation Analysis                     

Appendix C           Pro Forma Financial Projections          

        Appendix D           Raytheon's Statement Concerning Its Disputes with
                      Washington Group International, (Delaware)

         Appendix E           Current Schedule of Critical Vendor Claims Paid or
                  To Be Paid During the Chapter 11 Cases

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 I. INTRODUCTION

               Washington Group International, Inc. ("WGI") and certain of
its direct and indirect subsidiaries that are also debtors and                  
debtors-in-possession (the "Subsidiary Debtors") in the above-referenced Chapter
11 cases (collectively, the "Debtors") submit this disclosure statement (the    
"Disclosure Statement") pursuant to section 1125 of the Bankruptcy Code, for use
in the solicitation of votes on the Second Amended Joint Plan of Reorganization 
of Washington Group International, Inc. et al. dated as of July 24, 2001 (the   
"Plan"), proposed by the Debtors and filed with the United States Bankruptcy    
Court for the District of Nevada (the "Bankruptcy Court"). A copy of the Plan is
annexed as APPENDIX A to this Disclosure Statement.                             

            This Disclosure Statement sets forth certain information
regarding the Debtors' prepetition operating and financial history, the need to 
seek Chapter 11 protection, significant events that are expected to occur during
the Chapter 11 Cases, and the anticipated organization, operations and financing
of the Debtors upon successful emergence from Chapter 11 (the "Reorganized      
Debtors"). This Disclosure Statement also describes terms and provisions of the 
Plan, including certain alternatives to the Plan, certain effects of            
confirmation of the Plan, certain risk factors associated with securities to be 
issued under the Plan, and the manner in which distributions will be made under 
the Plan. In addition, this Disclosure Statement discusses the confirmation     
process and the voting procedures that holders of Claims entitled to vote under 
the Plan must follow for their votes to be counted.                             

              Except as otherwise provided herein, capitalized terms not
otherwise defined in this Disclosure Statement have the meanings ascribed to    
them in the Plan. Unless otherwise noted herein, all dollar amounts provided in 
this Disclosure Statement and in the Plan are given in United States dollars.   

             FOR A DESCRIPTION OF THE PLAN AND VARIOUS RISKS AND OTHER
FACTORS PERTAINING TO THE PLAN AS IT RELATES TO HOLDERS OF CLASS 6 AND 7 CLAIMS,
PLEASE SEE SECTION VI OF THE DISCLOSURE STATEMENT, ENTITLED "SUMMARY OF THE PLAN
OF REORGANIZATION," AND SECTION VIII OF THE DISCLO SURE STATEMENT, ENTITLED     
"CERTAIN FACTORS TO BE CONSIDERED."                                             

           THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN
PROVISIONS OF THE PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN DOCUMENTS RELATING
TO THE PLAN, CERTAIN EVENTS EXPECTED TO OCCUR IN THE CHAPTER 11 CASES AND       
CERTAIN FINANCIAL INFORMATION. ALTHOUGH THE DEBTORS BELIEVE THAT THE SUMMARIES  
OF THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES
ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH  
DOCUMENTS OR STATUTORY PROVISIONS. FACTUAL INFORMATION CONTAINED IN THIS        
DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBTORS' MANAGEMENT, EXCEPT WHERE 
OTHERWISE SPECIFICALLY NOTED. THE DEBTORS DO NOT WARRANT OR REPRESENT THAT THE  
INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT   
ANY MATERIAL INACCURACY OR OMISSION.                                            

                THE DEBTORS BELIEVE THAT THE PLAN WILL ENABLE THE DEBTORS TO
SUCCESSFULLY REORGANIZE AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT    
ACCEPTANCE OF THE PLAN IS IN THE BEST INTERESTS OF THE DEBTORS AND THE HOLDERS  
OF CLASS 6 CLAIMS AND CLASS 7 CLAIMS. THE DEBTORS URGE HOLDERS OF CLASS 6 AND 7 
CLAIMS TO VOTE TO ACCEPT THE PLAN.                                              

                  FOR FURTHER INFORMATION AND INSTRUCTION ON VOTING TO ACCEPT OR
REJECT THE PLAN, SEE SECTION XIII OF THE DISCLOSURE STATEMENT, ENTITLED "THE    
SOLICITATION; VOTING PROCEDURE."                                                

 II. PLAN VOTING INSTRUCTIONS AND PROCEDURES

A.       DEFINITIONS                                                            

             Except as otherwise defined herein, capitalized terms not
otherwise defined in this Disclosure Statement have the meanings ascribed to    
them in the Plan.                                                               

B.       NOTICE TO HOLDERS OF CLAIMS AND INTERESTS                              

               This Disclosure Statement will be transmitted to holders of
Claims that are entitled under the Bankruptcy Code to vote on the Plan. See     
SECTION XIII for a discussion and listing of those holders of Claims that are   
entitled to vote on the Plan and those holders of Claims and Interests that are 
not entitled to vote on the Plan. The purpose of this Disclosure Statement is to
provide adequate information to enable such Claim holders to make a reasonably  
informed decision with respect to the Plan prior to exercising                  

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their right to vote to accept or reject the Plan.                               

                 The Bankruptcy Court has approved the Disclosure Statement as
containing information of a kind and in sufficient and adequate detail to enable
such Claim holders to make an informed judgment with respect to acceptance or   
rejection of the Plan. THE BANKRUPTCY COURT'S APPROVAL OF THIS DISCLOSURE       
STATEMENT DOES NOT CONSTITUTE EITHER A GUARANTY OF THE ACCURACY OR COMPLETENESS 
OF THE INFORMATION CONTAINED HEREIN OR AN ENDORSEMENT OF THE PLAN BY THE        
BANKRUPTCY COURT.                                                               

               ALL HOLDERS OF CLAIMS AGAINST THE DEBTORS ARE ENCOURAGED TO
READ THIS DISCLO SURE STATEMENT AND ITS APPENDICES CAREFULLY AND IN THEIR       
ENTIRETY BEFORE DECIDING TO VOTE EITHER TO ACCEPT OR TO REJECT THE PLAN. This   
Disclosure Statement contains important information about the Plan,             
considerations pertinent to acceptance or rejection of the Plan, and            
developments concerning the Chapter 11 Cases.                                   

                THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT TO BE USED IN
CONNECTION WITH THE SOLICITATION OF VOTES ON THE PLAN. No solicitation of votes 
may be made except after distribution of this Disclosure Statement, and no      
person has been authorized to distribute any information concerning the Debtors 
other than the information contained herein.                                    

           CERTAIN OF THE INFORMATION CONTAINED IN THIS DISCLOSURE
STATEMENT IS BY ITS NATURE FORWARD LOOKING AND CONTAINS ESTIMATES, ASSUMPTIONS  
AND PROJECTIONS THAT MAY BE MATERIALLY DIFFERENT FROM ACTUAL, FUTURE RESULTS.   
Except with respect to the projections set forth in APPENDIX C annexed hereto   
(the "Projections") and except as otherwise specifically and expressly stated   
herein, this Disclosure Statement does not reflect any events that may occur    
subsequent to the date hereof and that may have a material impact on the        
information contained in this Disclosure Statement. The Debtors do not intend to
update the Projections; thus, the Projections will not reflect the impact of any
subsequent events not already accounted for in the assumptions underlying the   
Projections. Further, the Debtors do not anticipate that any amendments or      
supplements to this Disclosure Statement will be distributed to reflect such    
occurrences. Accordingly, the delivery of this Disclosure Statement shall not   
under any circumstance imply that the information herein is correct or complete 
as of any time subsequent to the date hereof.                                   

              EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION
CONTAINED HEREIN HAS NOT BEEN AUDITED BY A CERTIFIED PUBLIC ACCOUNTING FIRM AND 
HAS NOT BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING          
PRINCIPLES.                                                                     

C.       SOLICITATION PACKAGE                                                   

                Along with the mailing of this Disclosure Statement, as part
of the solicitation of acceptances of the Plan, the Debtors will send copies of 
(1) the Plan; (2) the notice of, among other things, the time for submitting    
Ballots to accept or reject the Plan, the date, time and place of the hearing to
consider confirmation of the Plan and related matters, and the time for filing  
objections to confirmation of the Plan (the "Confirmation Hearing Notice"); and 
(3) if you are the holder of Claim(s) entitled to vote on the Plan, one or more 
Ballots (and return envelopes) to be used by you in voting to accept or to      
reject the Plan.                                                                

D.       VOTING PROCEDURES, BALLOTS AND VOTING DEADLINE                         

                 After carefully reviewing the Plan, this Disclosure Statement
and the detailed instructions accompanying your Ballot, please indicate your    
acceptance or rejection of the Plan by voting in favor of or against the Plan on
the enclosed Ballot. You must complete and sign your original Ballot (copies    
will not be accepted) and return it in the envelope provided.                   

                Each Ballot has been coded to reflect the Class of Claims it
represents. Accordingly, in voting to accept or reject the Plan, you must use   
only the coded Ballot or Ballots sent to you with this Disclosure Statement.    

             IN ORDER FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE
PROPERLY COMPLETED AS SET FORTH ABOVE AND IN ACCORDANCE WITH THE VOTING         
INSTRUCTIONS ON THE BALLOT AND RECEIVED NO LATER THAN AUGUST 27, 2001, AT 4:00  
P.M. (PACIFIC TIME) (THE "VOTING DEADLINE") BY ROBERT L. BERGER & ASSOCIATES,   
LLC (THE "VOTING AGENT"). DO NOT RETURN ANY STOCK CERTIFICATES OR DEBT          
INSTRUMENTS WITH YOUR BALLOT.                                                   

                If you have any questions about (1) the procedure for voting
your Claim or Interest or with respect to the packet of                         

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materials that you have received or (2) the amount of your Claim, or if you wish
to obtain, at your own expense, unless otherwise specifically required by       
Federal Rule of Bankruptcy Procedure 3017(d), an additional copy of the Plan,   
this Disclosure Statement or any appendices or exhibits to such documents,      
please contact:                                                                 

Washington Group International, Inc.
c/o Robert L. Berger & Associates, LLC
PMB 1007
10351 Santa Monica Boulevard, Suite 101A
 Los Angeles, CA 90025
 Phone: (818) 771-7469
 Fax: (818) 905-6542

                  FOR FURTHER INFORMATION AND INSTRUCTION ON VOTING TO ACCEPT OR
REJECT THE PLAN, SEE SECTION XIII.                                              

E.       CONFIRMATION HEARING AND DEADLINE FOR OBJECTIONS TO CONFIRMATION       

               Pursuant to section 1128 of the Bankruptcy Code and Federal
Rule of Bankruptcy Procedure 3017(c), the Bankruptcy Court has scheduled a      
Confirmation Hearing for September 6, 2001, at 9:30 a.m. The Confirmation       
Hearing may be adjourned from time to time by the Bankruptcy Court without      
further notice except for the announcement of the adjournment date made at the  
Confirmation Hearing or at any subsequent adjourned Confirmation Hearing.       
Objections to Confirmation of the Plan must be filed with the Bankruptcy Court  
not later than August 24, 2001.                                                 

 III. HISTORY AND STRUCTURE OF THE DEBTORS

A.       OVERVIEW OF BUSINESS OPERATIONS                                        

1.       DESCRIPTION OF THE COMPANY'S BUSINESSES              

                The Company is an international provider of a broad range of
design, engineering, construction, construction management, facilities and      
operations management, environmental remediation and mining services to diverse 
public and private sector clients. The Company operates its businesses through  
five operating units, each of which comprises a separate reportable business    
segment: Power, Infrastructure & Mining, Industrial/Process, Government, and    
Petroleum & Chemicals. The reportable segments serve different markets and      
customers, and differ in their expertise, technology and resources necessary to 
perform their services. See SECTION V.L for a description of each business      
segment.                                                                        

             The Company's customers include Fortune 500 companies and
government entities, and projects often take years to complete and substantial  
financial commitments by project owners. Often, to be awarded a contract, the   
Company must be able to have issued for the benefit of the project owner,       
payment, performance or other types of bonds. SEE SECTION V.E.4.                

2.       BRIEF HISTORY                                        

                WGI was originally formed as a Delaware corporation on April
28, 1993 under the name Kasler Holding Company to become the parent company of  
WCG Holdings, Inc. ("WCG") and Kasler Corporation ("Kasler"), which were active 
in the infrastructure, contract mining, environmental remediation, commercial   
construction and construction materials markets. In April 1996, the name was    
changed from Kasler Holding Company to Washington Construction Group, Inc.      
("Washington Construction").                                                    

               On September 11, 1996, Washington Construction acquired the
net assets and the engineering and construction operations of Morrison Knudsen  
Corporation, a Delaware corporation ("Old MK"), in a transaction structured as a
merger of Old MK with and into Washington Construction, and changed its name to 
Morrison Knudsen Corporation. Old MK had a historic legacy of projects over the 
last 90 years, including the Hoover Dam, the San Francisco Bay Bridge, the      
Trans-Alaska Pipeline, and major features of the Kennedy Space Center. The      
acquisition of Old MK was an integral part of the reorganization of Old MK      
pursuant to a plan of reorganization (the "Old MK Plan") filed by Old MK in the 
United States Bankruptcy Court for the District of Delaware. The Old MK Plan was
confirmed by the Delaware Bankruptcy Court on August 26, 1996, and became       
effective concurrently with the merger on September 11, 1996. The Company has no
remaining obligations under the Old MK Plan.                                    

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           On March 22, 1999, the Company, in a joint venture with
British Nuclear Fuels, Ltd., acquired the operations of the government and      
environmental services businesses (the "Westinghouse Group") of CBS Corporation.
The Westinghouse Group manages highly complex facilities and programs for the   
United States Departments of Energy and Defense, and a wide range of services at
government installations. The acquisition of the Westinghouse Group was         
accounted for as a purchase business combination. WGI has a 60% economic        
ownership interest in the Westinghouse Group. THE ENTITIES THAT COMPRISE THE    
WESTINGHOUSE GROUP ARE NOT DEBTORS, HAVE NOT COMMENCED CHAPTER 11 CASES, AND    
THUS CONTINUE TO OPERATE IN THE ORDINARY COURSE OF BUSINESS UNAFFECTED BY THE   
CHAPTER 11 CASES.                                                               

                On July 7, 2000, pursuant to an agreement, dated as of April
14, 2000 (the "Stock Purchase Agreement"), among Raytheon Company ("Raytheon"), 
Raytheon Engineers & Constructors International, Inc., a wholly-owned subsidiary
of Raytheon ("RECI" and, together with Raytheon, the "Sellers"), and WGI, the   
Debtors purchased the capital stock of the subsidiaries of RECI (the "RECI      
Subsidiaries") and certain other assets of RECI and assumed certain liabilities 
of RECI (collectively the "RE&C Businesses"). Prior to such purchase, RECI      
provided engineering, design, procurement, construction, operation, maintenance 
and other services on a worldwide basis, and reported annual revenues of        
approximately $2.7 billion for the year ended December 31, 1999. The purchase   
price paid at the closing of the acquisition ("Closing") on July 7, 2000 for the
RE&C Businesses was $53 million in cash and the assumption of net liabilities   
estimated by the Sellers at the time of the transaction of approximately $450   
million. In addition, the Debtors paid the Sellers $83 million, representing the
net amount of cash advanced or paid by the Sellers for the use or benefit of the
RE&C Businesses between April 30, 2000 and Closing. Finally, the Stock Purchase 
Agreement provided that RECI would retain all non-restricted cash and cash      
equivalents held by RECI and the RECI Subsidiaries as of the close of business  
on April 30, 2000. At Closing, for purposes of administrative convenience, the  
RECI Subsidiaries retained all cash held by them, and the Debtors paid to the   
Sellers approximately $30.8 million, which amount was subject to post-Closing   
verification by the Debtors and adjustment. See SECTIONS IV.A AND V.I.1 for a   
discussion of subsequent disputes and litigation with Raytheon and APPENDIX D   
for a statement of position by Raytheon.                                        

             As a result of liquidity issues resulting from Raytheon's
failure to disclose known losses, WGI and 71 Subsidiary Debtors each filed a    
voluntary petition in the United States Bankruptcy Court for the District of    
Nevada on May 14, 2001 (the "Petition Date") for reorganization relief under    
Chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections            
101-1330, as amended (the "Bankruptcy Code"). The Debtors continue to manage    
and operate their business as debtors-in-possession pursuant to sections 1107   
and 1108 of the Bankruptcy Code. IN ADDITION TO THE SUBSIDIARY DEBTORS, WGI     
HAS DIRECT OR INDIRECT INTERESTS IN MANY SUBSIDIARIES (INCLUDING FOREIGN        
ENTITIES, JOINT VENTURES AND THE WESTINGHOUSE GROUP) THAT HAVE NOT COMMENCED    
CASES UNDER THE BANKRUPTCY CODE (COLLECTIVELY, THE "NON-DEBTOR SUBSIDIARIES")   
AND ACCORDINGLY CONTINUE TO OPERATE THEIR BUSINESSES IN THE ORDINARY COURSE     
WITHOUT BEING MATERIALLY IMPACTED BY THE DEBTORS' CHAPTER 11 CASES. FOR A       
LIST OF THE NON-DEBTOR SUBSIDIARIES, SEE SCHEDULE 1.67 OF THE PLAN.             

3.       PREPETITION FINANCIAL RESULTS                        

                 Set forth below is selected financial data for WGI, including
its direct and indirect Subsidiaries, on a consolidated basis for the nine      
months ended September 1, 2000 and for the year ended December 3, 1999. The     
financial data for the nine months ended September 1, 2000 is unaudited. The    
financial data for the year ended December 3, 1999 was audited for inclusion in 
WGI's Form 10-K filed with the SEC.                                             

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 TOTAL COMPANY
 STATEMENT OF OPERATIONS
($ US THOUSANDS)

                                                        [Enlarge/Download Table]


                                                      September 1, 2000  December 3, 1999
                                                         (unaudited)                     

                                                                                         
Revenue                                                  $  2,051,344       $  2,291,967 
Cost of revenue                                            (1,945,719)        (2,180,315)
                                                         ------------       ------------ 

Gross profit                                                  105,625            124,087 
General and administrative expenses                           (24,366)           (25,999)
Goodwill amortization                                         (21,608)           (12,576)
Integration and merger costs                                  (10,056)              --   
                                                         ------------       ------------ 

Operating income                                               49,525             85,512 
Investment income                                               5,828              3,429 
Interest expense                                              (17,730)            (7,642)
Other income, net                                               1,358              9,681 
                                                         ------------       ------------ 

Income before income taxes and minority interests in                                     
income of consolidated subsidiaries                            39,051             90,980 
Income tax expense                                            (15,510)           (33,924)
Minority interests in income of consolidated                                             
         subsidiaries                                          (3,523)            (8,771)
                                                         ------------       ------------ 

Net income                                               $     20,018       $     48,285 
                                                         ============       ============ 

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TOTAL COMPANY BALANCE SHEETS
 ($ US THOUSANDS, EXCEPT PER SHARE DATA)

                                                                [Download Table]

                          ASSETS               September 1, 2000  December 3, 1999
                                                  (unaudited)                     
                      Current Assets                                              

                                                                                  
Cash and cash equivalents                            372,114             52,475   
Accounts receivable                                  346,690            245,088   
Unbilled receivables                                 434,815            154,039   
Inventories, net of progress payments                 24,030             20,096   
Refundable income taxes                                2,638              3,055   
Investments in and advances to construction                                       
         joint ventures                               71,052             61,160   
Deferred income taxes                                 42,675             41,043   
Other                                                 12,384             18,826   
                                                ------------       ------------   

Total current assets                               1,306,398            595,782   
                                                ------------       ------------   

               Investments and Other Assets                                       
Securities available for sale, at fair value          41,774             41,640   
Investments in mining ventures                        64,798             69,063   
Cost in excess of net assets acquired              1,486,092            351,869   
Deferred income taxes                                 50,539             48,606   
Other                                                109,678             21,114   
                                                ------------       ------------   

Total investments and other assets                 1,752,881            532,292   
                                                ------------       ------------   

              Property and Equipment, at Cost                                     
Construction equipment                               303,011            195,833   
Land and improvements                                  8,049              7,970   
Buildings and improvements                            36,209             17,154   
Equipment and fixtures                                99,204             82,745   
                                                ------------       ------------   

Total property and equipment                         446,793            303,702   
Less accumulated depreciation                       (175,833)          (164,630)  
                                                ------------       ------------   

Property and equipment, net                          270,640            139,072   
                                                ------------       ------------   

Total assets                                       3,329,919          1,267,146   
                                                ============       ============   

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LIABILITIES AND                     
STOCKHOLDERS' EQUITY                      

Current Liabilities                     

                                                                [Download Table]
                                                                           
Current portion of long-term debt                       4,000          --  
Accounts payable and subcontracts payable             662,332       179,686

Billings in excess of cost and estimated                                   
earnings on uncompleted contracts                     746,763        61,805

Estimated costs to complete long-term contracts       292,331        46,905
Accrued salaries, wages and benefits, including                            
     compensated absences                             100,726        79,727
Income taxes payable                                    1,288         1,079
Other accrued liabilities                              30,797        68,806
                                                 ------------  ------------

Total current liabilities                           1,838,227       438,008
                                                 ------------  ------------

                  Non-Current Liabilities                                  
Long-term debt                                        693,818       100,000
Postretirement benefit obligation                      82,538        80,685
Accrued workers' compensation                          41,411        36,181
Pension and deferred compensation liabilities          91,621       100,116
Environmental remediation obligations                   4,430         6,016
Other non-current liabilities                          75,733          --  
                                                 ------------  ------------

Total non-current liabilities                         989,551       322,998
                                                 ------------  ------------

               Contingencies and Commitments                               
Minority Interests                                     86,721       103,050
                                                 ------------  ------------

Total stockholders' equity                            415,420       403,090
                                                 ------------  ------------

Total liabilities and stockholders' equity          3,329,919     1,267,146
                                                 ============  ============

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B.       CAPITAL STRUCTURE OF THE COMPANY                                       

1.       EQUITY                                               

             Prior to September 18, 2000, WGI's stock (the "Old Common
Stock") traded on the New York Stock Exchange (the "NYSE") under the ticker     
symbol "MK". Since that date, the Debtors' stock has traded on the NYSE under   
the ticker symbol "WNG." On May 14, 2001, the NYSE suspended trading of the Old 
Common Stock and initiated delisting procedures.                                

                As of the Petition Date, there were approximately 52,349,872
shares of common stock of WGI issued and outstanding. Approximately 39% of the  
Old Common Stock is held by, or for the benefit of, Dennis Washington. Mr.      
Washington is the Chairman of the Board of Directors of WGI. SEE SECTIONS       
III.C.1 AND V.G.                                                                

                  Under the Plan, the holders of Interests on account of the Old
Common Stock will be classified in Class 8. Under the Plan, holders of Claims   
and Interests in Class 8 will not receive or retain any property under the Plan 
on account of such Claims or Interests, unless there is a distribution on       
account of a WGI Creditor Trust Equity Residual. On the business day on which   
all conditions to consummation of the Plan have been satisfied or waived, as set
forth in the Plan (the "Effective Date"), all of the Old Common Stock will be   
deemed cancelled and extinguished.                                              

2.       THE PREPETITION SENIOR SECURED CREDIT FACILITY       

                Prior to the acquisition of the RE&C Businesses, the Company
had uncollateralized revolving credit facilities providing an aggregate         
borrowing capacity of $325 million, of which $99.9 million was outstanding at   
June 2, 2000. On July 7, 2000, in order to finance the RE&C Businesses          
acquisition, refinance such existing revolving credit facilities, fund working  
capital requirements and pay related fees and expenses, WGI obtained new senior 
secured credit facilities, providing for an aggregate of $1.2 billion of term   
loans and revolving borrowing capacity (the "Prepetition Senior Secured Credit  
Facility") from certain lenders, including Credit Suisse First Boston ("CSFB"), 
as administrative agent, collateral agent and an issuing bank and as arranger   
(the "Agent"), Bank of Montreal, as syndication agent, Bank of America, N.A. and
U.S. Bank National Association, as documentation agents, and various other      
persons from time to time parties to the Prepetition Senior Secured Credit      
Facility as lenders (collectively, the "Prepetition Secured Lenders"). WGI's    
obligations under the Prepetition Senior Secured Credit Facility are guaranteed 
by certain of WGI's direct and indirect subsidiaries, all of which are Debtors. 

                The Prepetition Senior Secured Credit Facility provided for,
on the terms and subject to the conditions thereof, (i) two senior secured term 
loan facilities in an aggregate principal amount of up to $500 million,         
including a multi-draw Tranche A term loan facility in an aggregate principal   
amount of $100 million that matures July 7, 2005 and a Tranche B term loan      
facility in an aggregate principal amount of $400 million that matures July 7,  
2007, and (ii) a five-year senior secured revolving credit facility in an       
aggregate principal amount of up to $500 million, all of which was available in 
the form of letters of credit. Initial borrowings under the Prepetition Senior  
Secured Credit Facility totaled $400 million, representing the full amount      
available under the Tranche B term loan facility. The Prepetition Senior Secured
Credit Facility contained affirmative, negative and financial covenants and     
specified events of default which are typical for a credit agreement governing  
credit facilities of the size, type and tenor of the Prepetition Senior Secured 
Credit Facility. Among the covenants were those limiting the ability of WGI and 
certain of its subsidiaries to incur debt or liens, provide guarantees, make    
investments and pay dividends or repurchase shares. On October 5, 2000, the     
Company terminated the Tranche A term loan facility due to its determination    
that near term borrowing capacity was sufficient and to eliminate ongoing       
related commitment fees.                                                        

               As of the Petition Date, the total amount outstanding under
the Prepetition Senior Secured Credit Facility was approximately $702 million,  
comprised of approximately $400 million in term loans outstanding and           
approximately $302 million in letter of credit advances. As of July 19, 2001,   
approximately $172 million of the letter of credit advances had been funded (for
a total of $572 million of funded debt) and approximately $130 million of       
undrawn letters of credit under the Prepetition Senior Secured Credit Facility  
remained outstanding. Borrowings under the Prepetition Senior Secured Credit    
Facility are secured by WGI and the guarantors pursuant to a grant of a security
interest in the property, interests in property and proceeds thereof now owned  
or hereafter acquired by those entities, subject to certain specified exceptions
(the "Prepetition Collateral").                                                 

                The Debtors and the Prepetition Secured Lenders believe that
Prepetition Collateral constitutes substantially all of the value of the        
Company. Based upon the valuation of the Company by Lazard (see SECTION XI.E),  
such value is less than the amount of funded debt owed to the Prepetition       
Secured Lenders. Accordingly, under the Plan, the Claims of the Prepetition     
Secured Lenders under the Prepetition Senior Secured Credit Facility are        
bifurcated into the Secured Lender Claims and the Lender Deficiency Claims,     
consistent with section 506(a) of the Bankruptcy Code. The amount of Secured    
Lender Claims Allowed under the Plan is approximately $505 million (subject to  
adjustment (if any) by the Confirmation Hearing based upon issuance of the      
Washington Stock Options), based on the                                         

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valuation discussion below. Lender Deficiency Claims will be established by the 
Confirmation Hearing based primarily upon the amount of funded debt owed to the 
Prepetition Secured Lenders (including any additional draws prior to the        
Confirmation Hearing on the letters of credit that have not as yet been drawn,  
which currently total $130 million) MINUS the amount of the Secured Lender      
Claims. The Secured Lender Claims are classified as Class 6 Claims. Under the   
Plan, on the Effective Date, each holder of an Allowed Class 6 Claim, in full   
satisfaction, settlement, release, and discharge of and in exchange for such    
Allowed Class 6 Claim, will receive on or as soon as practicable after the      
Distribution Date, its Pro Rata share of 100% of the New Common Shares (subject 
to dilution by the Management Options and the Washington Stock Options). Lender 
Deficiency Claims are classified as Class 7 Claims. SEE SECTION VI.C.2.(B).     

               The Creditors' Committee disagrees with both the conclusion
concerning the value of the Company and the scope of the liens and security     
interests claimed by the Prepetition Secured Lenders as set forth in this       
Disclosure Statement. The Committee has advised the Debtors that, based upon a  
preliminary evaluation of the Debtors' business plan by the Creditors'          
Committee's financial advisor, Chanin Capital Partners, it believes that the    
enterprise value of WGI and the other Debtors to be well in excess of the amount
necessary to fully compensate the Prepetition Secured Lenders. In addition, the 
Creditors' Committee believes that substantial assets were not included in the  
Collateral securing the Prepetition Senior Secured Credit Facility by agreement 
and that no attempt was made to perfect the liens or security interests of the  
Prepetition Secured Lenders in other assets which are also of substantial value.
The Creditors' Committee is continuing to investigate these issues. The         
Creditors' Committee has commenced an adversary proceeding against CSFB, as     
Agent for the Prepetition Secured Lenders, to determine the validity, priority  
and extent of the liens and security interests asserted by the Prepetition      
Secured Lenders in the property of the Debtors and to determine the effect of   
section 552(b)(1) of the Bankruptcy Code on the Secured Lender Claims. While the
matter is in litigation, if the Creditors' Committee prevails, the result may be
to determine that a significant amount of the Debtors' property is (a) not      
Collateral securing the Prepetition Senior Secured Credit Facility and available
to the holders of Allowed Class 7 Claims or (b) must be equitably shared between
the Prepetition Secured Lenders and the holders of Allowed Class 7 Claims. The  
Creditors' Committee's contentions are disputed by the Debtors and the          
Prepetition Secured Lenders.                                                    

3.       UNSECURED DEBENTURES                                 

                  In connection with the acquisition of the RE&C Businesses, WGI
also issued and sold $300 million aggregate principal amount of senior notes due
July 1, 2010 (the "Old Notes"). The Old Notes were issued pursuant to an        
Indenture dated as of July 7, 2000 and are unsecured. United States Trust       
Company of New York is the Indenture Trustee under that Indenture. The Old Notes
are unsecured senior obligations of WGI and are guaranteed by the same          
subsidiaries that guaranteed the obligations under the Prepetition Senior       
Secured Credit Facility. The Old Notes mature on July 1, 2010. Interest on the  
Old Notes was payable semiannually in arrears on January 1 and July 1,          
commencing January 1, 2001. The Old Notes were sold in a private offering to    
CSFB, BMO Nesbitt Burns Corp., and U.S. Bancorp Libra. The The Old Notes accrued
interest at a rate of 11% per annum through September 20, 2000, and at a rate of
11.5% per annum thereafter. The Old Notes effectively rank junior to all of     
WGI's secured indebtedness and to all liabilities of the subsidiaries of WGI    
that are not guarantors of the Old Notes. The Old Notes, however, are not       
contractually subordinated to the obligations under the Prepetition Senior      
Secured Credit Facility. The indenture under which the Old Notes were issued    
contains affirmative, restrictive and financial covenants and specifies events  
of default which are typical for an indenture governing an issue of high-yield  
senior unsecured notes. Among the covenants are those limiting the ability of   
WGI and certain of its subsidiaries to incur debt or liens, provide guarantees, 
make investments and pay dividends or repurchase shares. As of the Petition     
Date, outstanding Old Note principal obligations total $313 million. The Old    
Note Claims are classified in the Plan as Class 7 Claims, and thus the recovery 
under the Plan to holders of the Old Notes is a pro rata share in the WGI       
Creditor Trust. Under the Plan, on the Effective Date, the Old Notes shall be   
terminated automatically without any further action by any party and shall no   
longer be of any force or effect.                                               

C.       CORPORATE STRUCTURE OF THE COMPANY                                     

1.       CURRENT CORPORATE STRUCTURE                          

                 WGI was originally incorporated in Delaware on April 28, 1993
under the name Kasler Holding Company. In April 1996, the name of the           
corporation was changed from Kasler Holding Company to Washington Construction  
Group, Inc. On September 11, 1996, Washington Construction Group, Inc. merged   
with Morrison Knudsen Corporation, and changed its name to Morrison Knudsen     
Corporation. On September 15, 2000, Morrison Knudsen Corporation changed its    
name to Washington Group International, Inc.                                    

             WGI is a holding company with approximately 97 direct and
indirect subsidiaries in the United States and throughout the world. In         
addition, WGI has ownership interests in approximately 68 limited liability     
companies or joint ventures throughout the world. The Debtors consist of WGI and
71 of its subsidiary affiliates. The Debtors' primary base of operation is in   
the United States.                                                              

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4.       BOARD OF DIRECTORS                                   

       The following is a list, as of July 23, 2001, of the names of each of
the Directors of WGI.                                                           

  Name                                     Title
  ----                                     -----

  Dennis R. Washington                     Chairman and Director

David H. Batchelder                            Director     

Stephen G. Hanks                             Director   

   Robert S. Miller, Jr.                  Vice Chairman and Director

       Dorn Parkinson                     Vice Chairman and Director

Terry W. Payne                              Director  

                 Mr. Washington has been a Director of WGI since 1996, and was
appointed Chairman of WGI in September 1996. He also is founder and principal   
shareholder of Washington Corporations (interstate trucking and repair and sale 
of machinery and equipment), Missoula, Montana; and is founder and/or principal 
stockholder or partner in entities, the principal businesses of which, include  
rail transportation, shipping, barging and ship assist, mining, heavy           
construction, environmental remediation and real estate development. Mr.        
Washington's principal business is to make, manage and hold investments in      
operating entities.                                                             

               Mr. Batchelder has been a Director of WGI since 1993. He is
also Chairman and Chief Executive Officer of Batchelder & Partners, Inc. (an    
investment advisory and consulting firm) and Managing Member of Relational      
Investors LLC (general partner of active investment fund), San Diego,           
California.                                                                     

             Mr. Stephen G. Hanks was named a Director of WGI in June,
2001. Mr. Hanks joined the Company in 1978 as an attorney in the legal          
department. He earned a Bachelor of Science Degree in Accounting from Brigham   
Young University, an MBA from the University of Utah, and a Juris Doctor from   
the University of Idaho, was named President of WGI in April, 2000, and was     
named Chief Executive Officer of WGI in June, 2001.                             

            Mr. Miller has been a Director of WGI since 1996 and was
appointed a Vice Chairman in September 1996. He is also an advisor to Aetna,    
Inc. (health benefits and insurance and financial services), Hartford,          
Connecticut. Mr. Miller formerly served as President of Reliance Group Holdings,
Inc. (fire, marine and casualty insurance), New York, New York; Chairman and    
Chief Executive Officer of Waste Management, Inc. (environmental services),     
Houston, Texas; Acting Chief Executive Officer of Federal-Mogul Corp. (motor    
vehicle parts and accessories), Detroit, Michigan; and Chairman of Old MK.      

               Mr. Parkinson has been a Director of WGI since 1993 and was
appointed a Vice Chairman in September 1996. He is also chairman of and         
consultant to Washington Corporations (interstate trucking and repair and sale  
of machinery and equipment), Missoula, Montana. Mr. Parkinson formerly served as
President of Washington Corporations.                                           

               Mr. Payne has been a Director of WGI since 1993. He is also
Chairman and owner of Terry Payne & Co., Inc. (insurance and construction       
bonding), Missoula, Montana. Mr. Payne also serves as a Director of Washington  
Corporations and First Interstate Bank - Montana, as well as a Director and     
President of Hoiness LaBar Insurance Co., Inc.                                  

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3.       SENIOR OFFICERS                                      

   The following is a list, as of July 23, 2001, of the names of the
executive officers and the positions with WGI held by each officer.             

        Title                                   Name
        -----                                   ----

Chief Executive Officer and President             Stephen G. Hanks  

  Sr. Executive Vice President and               Vincent L. Kontny
Chief Operating Officer                               

  Sr. Executive Vice President and               Charles R. Oliver
Chief Business Development Officer                              

    Executive Vice President and                 George H. Juetten
Chief Financial Officer                               

       Executive Vice President                 G. Bretnell Williams

     Executive Vice President                   Robert C. Wiesel

    Executive Vice President                    David L. Myers
of Corporate Affairs                              

       Executive Vice President                 Ambrose L. Schwallie

     Executive Vice President                   Thomas H. Zarges

                  Stephen G. Hanks was named President of WGI in April 2000. Mr.
Hanks was named Chief Executive Officer in June, 2001. Prior to that date, Mr.  
Washington was Chief Executive Officer.                                         

                 Vincent L. Kontny was named chief operating officer of WGI in
April 2000 with overall responsibility for the company's operating groups. He is
also a member of the Office of the Chairman. Mr. Kontny is the former president 
and chief operating officer of Irvine, California-based Fluor Corporation and   
president of Fluor Daniel, Inc. He earned a civil engineering degree and doctor 
of science honoris causa from the University of Colorado. He also attended the  
Stanford Executive Program.                                                     

                  Charles R. Oliver was named chief business development officer
in January 2001 and is a member of the Office of the Chairman. Mr. Oliver has   
served the engineering and construction industry for 35 years. Prior to joining 
Washington Group International, Mr. Oliver spent 30 years with Fluor Daniel and 
retired in late 1999 as group president of Sales, Strategic Planning, and       
Regions. Mr. Oliver has a degree in civil engineering from Auburn University and
from Stanford University's Executive Program.                                   

            George Juetten, formerly Senior Vice President and Chief
Financial Officer of Dresser Industries, Inc., was appointed an Executive Vice  
President and Chief Financial Officer in January 2001. Mr. Juetten spent six    
years with Dresser Industries, where he also served as Vice President -         
Controller from 1993 to 1996. Prior to joining Dresser Industries, Mr. Juetten  
spent 24 years with Price Waterhouse as an Audit Partner with multinational     
clients, including Dresser Industries. He joined Price Waterhouse in 1969 and   
served in The Hague, Netherlands, from 1974 to 1977. Mr. Juetten holds an       
accounting degree from Marquette University.                                    

              G. Bretnell Williams, formerly Executive Vice President of
Washington Industrial/Process Operations, was appointed President and Chief     
Executive Officer of Washington Industrial/Process in January 2001. Mr.         
Williams, who has been engaged in business development and operations of        
industrial projects for more than four decades, started his career with         
Washington Group as Vice President of Marketing in 1976. He later served as     
President of the company's H.K. Ferguson Company and was named to his present   
position in 1991. Mr. Williams graduated from Yale University with an           
engineering degree in 1951.                                                     

                Robert C. Wiesel is president and chief executive officer of
the Petroleum & Chemicals unit of Washington Group. Joining Stone & Webster     
Engineering Corporation (SWEC) in 1972, Mr. Wiesel began his career as a civil  
engineer in the engineering and design of power generating projects throughout  
the United States. Named the executive vice president of Stone & Webster, Inc., 
and vice chairman of SWEC in 1998, he was one of the four senior executives that
comprised the company's core management team. After 27 years with Stone &       
Webster, Mr. Wiesel joined Raytheon Engineers & Constructors in May of 1999 as  
senior vice president of Petroleum and                                          

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Chemicals. Mr. Wiesel earned a bachelor of science degree in civil engineering  
from the University of Massachusetts and a master's in civil engineering from   
Northeastern University.                                                        

                  David L. Myers, formerly President and Chief Executive Officer
of the Washington Power unit, was named Executive Vice President of Corporate   
Affairs in January 2001. Prior to joining Washington Group, Mr. Myers served as 
Chief Operating Officer at RE&C and as President of Fluor Daniel's Environmental
Strategies Operating Company. Mr. Myers served for seven years in the nuclear   
submarine service, joining Fluor Engineers & Constructors in 1975. Mr. Myers    
oversees key strategic and financial initiatives and provides his industry      
expertise to the Debtors' corporate affairs in the United States and abroad. Mr.
Myers holds a bachelor of sciences degree in electrical engineering from the    
United States Naval Academy, a masters of electrical engineering degree from the
United States Postgraduate School, a masters in administration degree from the  
University of California at Irvine, and attended the Executive Program in       
International Management at Columbia University.                                

                Ambrose L. Schwallie was named president and chief executive
officer of Government unit in August of 1999. He directs the operations that    
serve the United States Departments of Energy and Defense, and other clients in 
the nuclear-services and environmental markets. He had served as president of   
the Westinghouse Savannah River Company (WSRC) since August 1991. Before being  
named president of WSRC, Mr. Schwallie served as the company's executive vice   
president. Previously, Mr. Schwallie was engineering manager for Westinghouse   
Electric Company's Advanced Energy Systems Division. Since beginning his career 
with Westinghouse Electric in 1972, Mr. Schwallie has performed a variety of    
research and engineering activities. He earned bachelor of science and master of
science degrees in Mechanical Engineering from The Ohio State University.       

            Thomas H. Zarges, formerly President and Chief Executive
Officer of WGI's Industrial/Process unit, was named President and Chief         
Executive Officer of Washington Power in January 2001. Mr. Zarges is a 27-year  
veteran of the engineering and construction industry who joined the company in  
1991 as President and Chief Executive Officer of the company's Power and        
Industrial/Manufacturing Divisions. He previously served 17 years with          
Raytheon's former subsidiary United Engineers & Constructors, with supervisory  
and management positions in field construction, engineering, and project        
management. His experience includes major nuclear and fossil-power projects,    
high-technology projects in the steel and process industries, industrial        
manufacturing, and heavy civil construction. He is a 1970 engineering graduate  
of the Virginia Military Institute.                                             

IV. EVENTS LEADING TO COMMENCEMENT OF THE CHAPTER 11 CASES

A.       THE RAYTHEON TRANSACTION                                               

           As discussed in SECTION III.A.2 above, on July 7, 2000,
pursuant to the Stock Purchase Agreement, WGI purchased the RE&C Businesses.    
Because of the size and complexity of the businesses being sold to WGI, the     
Stock Purchase Agreement did not contain a fixed purchase price for the         
transaction, but rather provided that the cash portion of the purchase price    
paid would be calculated using selected audited balance sheet items of the      
acquired businesses as of April 30, 2000, and that the price paid at closing of 
the transaction would be subject to a purchase price adjustment.                

                  Following the closing, WGI undertook a comprehensive review of
existing contracts that were acquired for the purpose of making a preliminary   
allocation of the acquisition price to the net assets acquired. As part of this 
review, WGI evaluated, among other matters, estimates at completion for         
long-term contracts in process as of the acquisition date. The preliminary      
results of this review raised questions about the RE&C Businesses and indicated 
that the estimates at completion of numerous RE&C long-term contracts required  
substantial adjustment. As a result, in its Form 10-Q Quarterly Report for the  
period ended September 1, 2000, WGI significantly decreased the carrying value  
of the net assets acquired and increased the goodwill associated with the       
transaction. WGI's investigation of the RE&C Businesses continued thereafter,   
and, based on the results of that review, WGI expected that the purchase price  
adjustment would be significant.                                                

                 Under agreements between Raytheon and WGI, Raytheon agreed to
provide the April 30, 2000 audited balance sheet of the RE&C Businesses by      
January 14, 2001. Delivery by Raytheon of this balance sheet was required to    
begin the purchase price adjustment process under the Stock Purchase Agreement. 
The balance sheet was not delivered at that time and had not been delivered as  
of May 14, 2001. As a result of Raytheon's failure to comply with the purchase  
price adjustment process, WGI did not obtain any adjustment to the purchase     
price by May 14, 2001.                                                          

        As a result of WGI's post-closing review of the RE&C
Businesses, WGI also believes that Raytheon committed fraud in connection with  
the sale of the RE&C businesses. In a lawsuit filed on March 8, 2001, WGI       
alleges that Raytheon's management consistently engaged in inappropriate        
accounting practices and intentional earnings manipulation by overstating       
revenue, understating                                                           

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costs, avoiding recognition of losses and thereby severely overstating profits  
and understating losses on numerous projects. These activities concealed        
significant cost overruns and negative cash flows at many of the RE&C projects  
acquired. These undisclosed cost overruns and negative cash flows, combined with
WGI's inability to receive a purchase price adjustment from Raytheon in a timely
manner, created a severe, near-term liquidity crisis for the Company.           

            It is anticipated that, during the Chapter 11 Cases, the
Debtors will reject the Stock Purchase Agreement and certain related agreements,
after notice and a hearing by the Bankruptcy Court.                             

           See APPENDIX D for a statement of position by Raytheon.

B.       LIQUIDITY ISSUES                                                       

                The Company's liquidity crisis became acute by late February
and early March, 2001. Two projects with respect to which Raytheon retained     
liability under guaranty agreements with the project owners - projects to build 
power plants in Massachusetts for Sithe - had particularly negative cash flows. 
In order to preserve cash and be able to continue operations, the Company was   
forced to take the unprecedented action of suspending performance on those two  
projects in March, 2001. See SECTION V.I.2 for a discussion of the litigation   
commenced against the Debtors by Mitsubishi with respect to the Sithe project.  

                 The Company initially sought to solve its liquidity crisis by
pursuing alternatives that could have avoided the need to commence the Chapter  
11 Cases. First, the Company sought to negotiate some type of settlement with   
Raytheon. Those attempts were unsuccessful. Second, the Company attempted to    
negotiate with the Prepetition Secured Lenders as well as other lending         
institutions to procure additional financing outside of a Chapter 11 filing.    
Those efforts were also unsuccessful. Third, the Company retained Lazard to     
solicit interest from potential third parties in the sale of the Company. No    
offers were received that the Company and the Prepetition Secured Lenders       
believed reflected the fair value of the businesses. As a result, the Company's 
only alternative to obtain the additional liquidity to continue operations and  
preserve going concern value was the financing offered by the DIP Lenders       
pursuant to a Chapter 11 filing. See SECTION V.C for a summary of the DIP       
Facility. The Creditors' Committee and certain other parties have asserted that 
they dispute the adequacy of the Debtors' prepetition efforts to sell all or    
part of their businesses. The Debtors contest that assertion. See SECTION       
X.II.B.                                                                         

C.       NEGOTIATIONS WITH PREPETITION SECURED LENDERS                          

        The ability of the Company, like any engineering and
construction company, to maintain and grow its going concern value, depends, in 
large measure on the ability to continue to procure new work. The Company's     
projects are typically large, complex projects that take years to complete and, 
often involve investments of tens, if not hundreds, of millions of dollars by   
project owners. Not surprisingly, many customers are reluctant to award new work
to a company in Chapter 11. The ability to procure bonds to secure performance, 
which is often required to be awarded new work by a project owner, is extremely 
difficult for a Chapter 11 debtor.                                              

        As a result, prior to the Petition Date, the Company
determined that if a Chapter 11 filing was unavoidable, the only way to preserve
going concern value was to take steps designed to complete the restructuring    
process quickly. To that end, in conjunction with the negotiations with the     
Prepetition Secured Lenders for the DIP Facility, the Company began negotiations
on the terms of a reorganization plan. The Company believed that it was         
imperative if value was to be preserved and maximized for the benefit of all    
creditors, that the commencement of the Chapter 11 Cases be accompanied by the  
filing of a reorganization plan, both to demonstrate to customers, vendors and  
contractors and employees that a restructuring would be completed quickly and   
to, in fact, attempt to complete the process as quickly as practicable.         
Consistent with that view, the DIP Lenders and Prepetition Secured Lenders      
expressly conditioned their willingness to provide and consent to, respectively,
the DIP Facility, upon the concurrent filing of a reorganization plan acceptable
to them in principle. As a result, a draft reorganization plan was filed on May 
14, 2001, reflecting the results of the Company's negotiations with the         
Prepetition Secured Lenders and the DIP Lenders. Subsequently, that plan was    
amended to incorporate the agreement reached with Mr. Dennis Washington, as     
described in SECTION V.G, which agreement is embodied in the Plan.              

 V. CHAPTER 11 CASES

A.       CONTINUATION OF BUSINESS; STAY OF LITIGATION                           

                 On May 14, 2001, the Debtors filed petitions for relief under
Chapter 11 of the Bankruptcy Code. Since the Petition Date, the Debtors have    
continued to operate as debtors-in-possession subject to the supervision of the 
Bankruptcy Court and in accordance with the Bankruptcy Code. Under the          
Bankruptcy Code, the Debtors are required to comply with certain statutory      
reporting requirements,                                                         

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including the filing of monthly operating reports. As of the date hereof, the   
Debtors have complied with such requirements and with which the Debtors will    
continue to comply. The Debtors are authorized to operate their business in the 
ordinary course of business, with transactions out of the ordinary course of    
business requiring Bankruptcy Court approval.                                   

                An immediate effect of the filing of the Debtors' bankruptcy
petitions is the imposition of the automatic stay under the Bankruptcy Code     
which, with limited exceptions, enjoins the commencement or continuation of all 
collection efforts by creditors, the enforcement of liens against property of   
the Debtors and the continuation of litigation against the Debtors. This relief 
provides the Debtors with the "breathing room" necessary to assess and          
reorganize their business. The automatic stay remains in effect, unless modified
by the Bankruptcy Court, until consummation of a plan of reorganization.        

B.       FIRST DAY ORDERS                                                       

              On the first day of these cases, the Debtors filed several
motions seeking certain relief by virtue of so-called "first day orders." First 
day orders are intended to facilitate the transition between a debtor's         
prepetition and postpetition business operations by approving certain regular   
business practices that may not be specifically authorized under the Bankruptcy 
Code or as to which the Bankruptcy Code requires prior approval by the          
Bankruptcy Court. Many of the first day orders obtained in these cases are      
typical for large Chapter 11 cases. Other first day relief, as described more   
fully below, was atypical and was specifically designed to preserve the value of
the Debtors' estates by enabling the Debtors to continue to work on ongoing     
projects and receive the revenue associated therewith in the ordinary course.   

            THE DESCRIPTIONS OF THE RELIEF SOUGHT OR OBTAINED IN THE
CHAPTER 11 CASES SET FORTH BELOW AND THROUGHOUT THIS DISCLOSURE STATEMENT ARE   
SUMMARIES ONLY. ALL PLEADINGS FILED IN THE CHAPTER 11 CASES, AND ALL ORDERS     
ENTERED BY THE BANKRUPTCY COURT, ARE PUBLICLY AVAILABLE AND MAY BE FOUND,       
DOWNLOADED AND PRINTED FROM THE WGI WEBSITE FOUND AT http//www.wgint.com. or    
http//www.nvb.uscourts.gov.                                                     

             The more typical first day orders in the Chapter 11 Cases
authorized, among other things:                                                 

                  a.       the retention of the following professionals to serve
                         on behalf of the Debtors: (i) Skadden, Arps, Slate,
                      Meagher & Flom (Illinois) and its affiliated law
                          practices, as bankruptcy counsel; (ii) Lionel Sawyer
                        & Collins as local bankruptcy counsel; (iii) Zolfo
                Cooper, LLC ("Zolfo Cooper") as bankruptcy
                      consultants and special financial advisors; (iv)
                           Lazard as investment banker; and (v) Robert L. Berger
                           & Associates, LLC, as solicitation and noticing agent
(the "Claims Agent");     

                  b.       the continued retention of Jones, Day, Reavis & Pogue
                 to provide legal services to the Debtors in
                      connection with various corporate and litigation
                    matters, including litigation arising from the
         acquisition of the RE&C Businesses;

               c.       the continued retention of professionals regularly
                       employed by the Debtors in the ordinary course of
business;                 

              d.       the maintenance of the Debtors' bank accounts and
                operation of their cash management systems
                        substantially as such systems existed prior to the
Petition Date;            

                e.       payment of employees' accrued prepetition wages and
employee benefit claims;  

        f.       payment of prepetition shipping, warehouse,
                          distributor or broker charges and related possessory
liens;                    

                  g.       continued utility services during the pendency of the
Chapter 11 Cases;         

       h.       payment of certain prepetition tax claims;

                  i.       confirmation that the Debtors' undisputed obligations
                           arising from postpetition delivery of goods will have
             administrative expense priority status,
                          administrative expense treatment for certain holders
                       of valid reclamation claims, and authority to pay
                          certain expenses in the ordinary course of business;

         j.       joint administration of each of the Debtors'
bankruptcy cases.         

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              Importantly, on the first day of the Chapter 11 Cases, the
Debtors also obtained entry of an order by the Bankruptcy Court authorizing them
to continue to pay, in the ordinary course of business, vendors, subcontractors 
and other creditors ("Critical Vendors") that provide goods and services for    
ongoing projects (the "Critical Vendor Order") subject to a cap of $170 million.
Absent the ability to make such payments, the Debtors believe that continued    
receipt of payments from project owners would be jeopardized for a number of    
reasons. For example, absent payment of subcontractors, such subcontractors     
would be able to assert mechanics liens against project owner property, and such
project owners could divert payments that would otherwise be made to the Debtors
to subcontractors to satisfy such liens. Moreover, the Debtors would be unable  
to continue to force subcontractors to continue work on projects absent payment 
of their claims, which would result in the Debtors defaulting on project        
contracts, triggering the right of owners to call on performance or other bonds 
issued for their benefit by the Debtors' sureties. Such events would trigger    
equitable subrogation claims by such sureties to the future payments otherwise  
due to the Debtors under those contracts, severely compromising, if not         
eliminating, the Debtors' receipt of ongoing project revenue.                   

            As a result, the Debtors sought approval of the Critical
Vendor Order. Importantly, by its terms, the Critical Vendor Order requires a   
vendor or subcontractor whose prepetition claim is paid thereunder to continue  
to provide goods and services to the Debtors on ordinary payment terms. This    
mechanism ensures that the Debtors continue to receive trade credit support from
their Critical Vendors, which provides a significant liquidity benefit to the   
Debtors' estates. A list of each Critical Vendor that has received payments to  
date or that is anticipated to receive such payments during these Chapter 11    
Cases is attached hereto as APPENDIX E.                                         

C.       DEBTOR IN POSSESSION FINANCING                                         

1.       THE DIP FACILITY                                     

               As noted above, the Company required substantial additional
liquidity to fund operations during the Chapter 11 Cases. Accordingly, on the   
Petition Date, the Debtors sought and obtained interim authority to enter into  
the DIP Facility with CSFB as administrative agent, and the DIP Lenders. Final  
authority to enter into the DIP Facility was granted by the Bankruptcy Court on 
June 13, 2001. Specifically, the DIP Facility provides for secured postpetition 
financing from the DIP Lenders in an aggregate principal amount not to exceed   
$350 million, with $220 million fully committed as of the date hereof, and up to
an additional $130 million to be sought to be made available. The DIP Facility  
has a term of nine months. The Debtors have and will continue to utilize the    
funds provided by the DIP Facility for general working capital and the Debtors' 
other general corporate purposes. As of the Effective Date, the Debtors'        
obligations under the DIP Facility are projected to equal approximately $30     
million of funded loans plus approximately $40 million in outstanding letters of
credit. Actual amounts may be higher or lower. The Debtors' draws on the DIP    
Facility to date have been lower than expected primarily due to the lack of     
deterioration in expected receipts from the Debtors' customers and better than  
anticipated postpetition trade credit being received by the Debtors.            

          To secure the repayment of the borrowing and all other
obligations arising under the DIP Facility, the Debtors granted the DIP Lenders 
first priority liens on substantially all of their assets, SENIOR to the liens  
of the existing Prepetition Secured Lenders, but junior to other valid liens    
existing on the Petition Date. Obligations under the DIP Facility were also     
granted "superpriority" claim status under section 364(c)(1) of the Bankruptcy  
Code, meaning they have priority over all other administrative expenses. The    
liens and claims granted to the DIP Lenders are subject to the fees and expenses
of the Office of the United States Trustee under 28 U.S.C. Section 1930 and the 
Clerk of the Bankruptcy Court, as well as a $2 million carve-out for fees and   
disbursements of the professionals of the Debtors and the Creditors' Committee  
incurred after an event of default under the DIP Facility.                      

                 The DIP Facility also contains covenants, representations and
warranties, events of default, and other terms and conditions typical of credit 
facilities of a similar nature. Among the events of default is the failure of   
certain events to occur by designated deadlines, such as approval of the        
Disclosure Statement by the Bankruptcy Court and Confirmation of the Plan.      
Importantly, the DIP Facility limits the Debtors' borrowing ability to the terms
of a budget agreed upon by the Debtors and the DIP Lenders.                     

            Pursuant to the Bankruptcy Court order approving the DIP
Facility, the DIP Lenders and the Agent are provided certain releases. See      
SECTION V.B of this Disclosure Statement for information as to how to view this 
order (and other pleadings in these Chapter 11 Cases) on the Debtors' website.  

2.       AUTHORIZATION TO USE CASH COLLATERAL                 

                 The cash the Debtors had on hand as of the Petition Date, and
substantially all cash received by the Debtors during the Chapter 11 Cases,     
constitutes "cash collateral" of the Prepetition Secured Lenders. Cash          
collateral is defined in section 363 of the Bankruptcy Code and includes, but is
not limited to, "cash, negotiable instruments, documents of title, securities,  
deposit accounts, . . .                                                         

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other cash equivalents . . . and . . . proceeds, products, offspring, rents or  
profits of property subject to a security interest . . . ." 11 U.S.C. Section   
363(a). Under the Bankruptcy Code, the Debtors are prohibited from using,       
selling, or leasing cash collateral unless either the appropriate creditor(s)   
consent or the Bankruptcy Court, after notice and a hearing, authorizes such    
action. In connection with the DIP Facility, the Debtors obtained authority to  
enter into a stipulation to use the Cash Collateral to pay current operating    
expenses, including payroll and to pay subcontractors and other vendors to      
ensure that projects continue and to ensure a continued supply of materials     
essential to the Debtors' continued viability.                                  

3.       EXIT FINANCING                                       

             On the Effective Date of the Plan, the Debtors anticipate
entering into a new senior secured facility (the "Exit Facility") in order to   
(a) repay amounts outstanding on the Effective Date under the DIP Facility, (b) 
make other payments required to be made on the Effective Date or the            
Distribution Date, and (c) provide such additional borrowing capacity as is     
required by the Debtors following the Effective Date to maintain their          
operations. As of the date hereof, no commitment for an Exit Facility has been  
obtained. SEE SECTION V.L.1.(f).                                                

D.       APPOINTMENT OF CREDITORS' COMMITTEE                                    

                  On May 21, 2001, the United States Trustee for the District of
Nevada appointed, pursuant to section 1102(a) of the Bankruptcy Code, certain   
entities to the Official Committee of Unsecured Creditors of the Debtors (the   
"Creditors' Committee"). The members of the Creditors Committee are United      
States Trust Company of New York; Oaktree Capital Management, LLC; Principal    
Life Insurance Company; Teachers Insurance and Annuity Association of America;  
Toshiba International Corp.; MK Gold Company; Boccard USA Corporation; Kinetics 
Systems Inc.; and Mitsubishi. The Creditors' Committee retained Murphy Sheneman 
Julian & Rogers, PC as counsel and Chanin Capital Partners as financial         
advisors.                                                                       

E.       OTHER MATERIAL RELIEF OBTAINED DURING THE CHAPTER 11 CASES             

                  In addition to the first day relief sought in these Chapter 11
Cases, the Debtors have sought or anticipate seeking authority with respect to a
multitude of matters designed to assist in the administration of the Chapter 11 
Cases, to maximize the value of the Debtors' estates and to provide the         
foundation for the Debtors' emergence from Chapter 11. Set forth below is a     
brief summary of certain of the principal motions the Debtors have filed during 
the pendency of the Chapter 11 Cases.                                           

         1.       EMPLOYEE RETENTION PROGRAM AND CONTINUANCE OF PTO PROGRAM - On
                 the Petition Date, the Debtors filed a motion (the "Retention
                and Severance Motion") with the Bankruptcy Court, requesting
             Bankruptcy Court approval of a program (the "Key Employee
             Retention Program") designed to retain key executives and
                 employees. The Key Employee Retention Program consists of two
      separate components: (i) the implementation and\or
                 continuation of an employee retention program (the "Retention
         Program") and (ii) an employee severance program (the
                "Severance Program"). The Retention and Severance Motion, as
             amended to reflect certain agreements with the Creditors'
               Committee, was approved by the Bankruptcy Court on June 25,
                2001. The Key Employee Retention Program is an integral part
                 of a comprehensive employee retention program designed by the
         Debtors to minimize management and employee turnover.

               The Retention Program consists of five separate components:
           (i) corporate and management retention ("Part I"); (ii)
              project retention ("Part II"); (iii) power group retention
              ("Part III"); (iv) Harquala retention ("Part IV"); and (v)
                former Raytheon Engineers & Constructors executive retention
                  ("Part V"). Part I covers key personnel that provide strategic
               and administrative functions for the Debtors. Key employees
                included in Part I will receive three equal payments made at
               six month intervals, beginning in September, 2001, with the
                  final payment conditioned upon confirmation of the Plan. Parts
                  II, III, and IV cover key employees related to certain project
                 work currently underway by the Debtors. Key employees covered
                 under Part II will receive two equal payments made six months
              apart, beginning in September, 2001. Key employees covered
               under Part III will receive one payment in September, 2001.
               Key employees covered under Part IV will receive a lump sum
         payment in November, 2001. Under Part V, certain RE&C
             executives who are currently employed by the Debtors will
                  receive the remaining two of three scheduled payments in July,
                  2001 and July, 2002. The first of the three scheduled payments
            was made in June, 2000 pursuant to a program designed by
                Raytheon to retain key RE&C executives after the acquisition
              of the RE&C Businesses. The maximum aggregate amount to by
        paid out under the Retention Program is $31,894,252.

              The Severance Program is necessary in order to ensure that
           employees will not be terminated without receiving some
              compensation in the form of severance. Under the Severance
     Program, the Debtors (i) may enter into severance

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           agreements with employees hired to replace officers who
           previously had severance agreements and (ii) continue a
               severance program that was instituted prior to the Petition
                  Date (the "Prepetition Severance Program"), assuring employees
            that any severance claims they may hold will be accorded
                 postpetition administrative status. The Prepetition Severance
                Program began in March, 2001 and continues through December,
              2002 and under its terms, a participant receives severance
                benefits if such participant suffers a decrease in pay or is
          forced to make an unacceptable relocation. The maximum
            aggregate amount of payments that could theoretically be
      required to be made under the Severance Program is
                $24,432,464, with limitations on the amount that can be paid
prior to the Effective Date of the Plan.    

                 In addition, on the Petition Date, the Debtors filed a motion
                 (the "PTO Motion") to continue a certain prepetition employee
                benefit program as modified, through which employees accrued
              paid time off ("PTO") during each pay period that could be
             used (subject to supervisory approval) for vacation, sick
               leave, bereavement, religious observances and certain other
                 purposes (the "PTO Program"). Eligible employees may also buy
             or sell up to 40 hours of future PTO annually. Unused PTO
                 carries over from year to year and can accrue up to a maximum
                 of 12-20 weeks depending on the employee's length of service.
                Additionally, under the PTO Program, an eligible employee is
                  entitled to payment of accrued paid time off upon termination.

               The Debtors believe that continuation of the PTO Program is
                essential to the continued employment, active participation,
            and dedication of the Debtors' employees who possess the
           knowledge, experience and skill to support the Debtors'
             business operations. The Debtors estimate that, as of the
              Petition Date, accrued unpaid PTO aggregates approximately
               $42.7 million or approximately $4,528 per employee. The PTO
                 Motion was approved by the Bankruptcy Court on June 13, 2001.

       2.       INTERIM ARRANGEMENTS REGARDING RED OAK AND ILIJAN PROJECTS -
                The Red Oak project is a construction project in Sayerville,
         NJ, for the construction of a combined cycle electric
                generating plant (the "Red Oak Project"). The Ilijan project
                 is a construction project in the Republic of Philippines, for
                 the construction of a natural gas-fired generating plant (the
                 "Ilijan Project"). Both projects were acquired as part of the
              RE&C Businesses Acquisition, and the Company's performance
            under both the Red Oak Project and the Ilijan Project is
                 guaranteed by Raytheon pursuant to guarantees executed at the
inception of the projects.                  

               The Ilijan Project and Red Oak Project are projected by the
              Company to be cash flow negative for the Company after the
             Petition Date. Due to budgetary constraints under the DIP
                 Facility, the Company could not make further expenditures for
           costs and expenses on the Ilijan Project or the Red Oak
                 Project unless and until the project owners, Raytheon and the
             DIP Lenders agreed to an arrangement that would allow the
                 Company to continue work on the projects but would reform the
                 structure of payments to be cash-flow neutral to the Company.

               Accordingly, on May 22, 2001, the Debtors, the DIP Lenders,
           Raytheon, and the respective Red Oak and Ilijan Project
                  owners, reached interim agreements that allowed the Company to
                 continue work on those projects on a cash-flow neutral basis.
                With respect to the Ilijan Project, the project owner agreed
           to make remaining contract payments to Raytheon and the
                  Debtors' partner on the project, (Mitsubishi), rather than the
           Debtors. The Debtors, in turn, are paid by Raytheon and
                 Mitsubishi weekly in advance for estimated costs and expenses
            on the project. All parties' respective rights to assert
             claims against one another arising out of the prepetition
          contracts, are fully preserved. This interim agreement
         currently expires on July 27, 2001, and a longer-term
       agreement, on substantially similar terms, is under
negotiation.                                

              With respect to the Red Oak Project, the interim agreement
          reached provides for the project owner to make certain
                specified payments to the Company. The Company has agreed to
             segregate those funds and utilize them only for costs and
                 expenses incident to the Red Oak Project, and to use no other
                funds for the project. As of the date hereof, this agreement
                 extends through approximately August 3, 2001, and is expected
           to be extended. A longer-term arrangement is subject to
                  pending negotiations. In addition, before the Petition Date, a
            letter of credit was issued under the Prepetition Senior
                 Secured Credit Facility for the benefit of the project owner,
              to secure the Company's performance. Prior to the Petition
          Date, that letter of credit was drawn in the amount of
              approximately $95 million. The Prepetition Secured Lenders
                  have asserted that the letter of credit should have been drawn
                 in the amount of $82 million based on information provided to
               the Prepetition Secured Lenders by the Company. The Company
                 disputes that contention. All parties' rights with respect to
              this issue, as well as any other claims arising out of the
                  prepetition contracts for the Red Oak Project, have been fully
preserved.                                  

                 These agreements allow the Company to continue working on the
         Red Oak and Ilijan Projects and to pay all employees,

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                  vendors and subcontractors in the ordinary course of business.
          At this time, there can be no assurance that long-term
                 agreements for the continued performance of these projects by
               the Company and funding to the Company for that performance
will be able to be reached.                 

         3.       EXTENSION OF TIME TO ASSUME OR REJECT UNEXPIRED LEASES - Given
                  the size and complexity of these Chapter 11 Cases, the Debtors
                  determined that they will be unable to complete their analysis
              of all nonresidential real property leases during the time
                limitation prescribed in section 365(d)(4) of the Bankruptcy
                  Code. Accordingly, the Debtors sought an extension of the time
        by which the Debtors must assume or reject leases of
                nonresidential real property, which extension was granted by
            the Bankruptcy Court on July 9, 2001, and expires on the
                  earlier of (i) November 15, 2001 or (ii) the effective date of
            any confirmed plan of reorganization in these Chapter 11
                 Cases. All such leases will be assumed under the Plan, except
               for those leases specified on SCHEDULE 6.3 of the Plan. SEE
SECTION VI.M.1.                             

         4.       POSTPETITION BONDING FACILITY - The ability of a contractor to
               be awarded many types of construction projects depends upon
             the ability to have issued payment, performance and other
             types of bonds for the benefit of the project owners. The
                  Debtors have outstanding many such bonds on existing projects,
              and need to be able to issue more of such bonds to be in a
                 position to procure new contract awards and thus preserve and
maximize the value of these estates.        

                 Bonding companies are sureties, and they expose themselves to
              significant financial risks when they issue a bond. If the
                  principal to the construction contract defaults, the surety is
              required to perform the contract in place of the principal
             pursuant to the terms of the bonds. Under surety law, the
               surety essentially becomes the owner of future monies to be
                  paid under the contract by the project owner; however, despite
                  that protection, completion of a defaulted project may be at a
               substantial loss to the surety, because it bears all bonded
               costs and expenses of completion of the project. The surety
                has claims for its losses against the defaulting contractor.

            As a result, any surety cautiously screens applicants to
             minimize its potential exposure. Such screening obviously
                includes an examination of the principal's financial health.
                  Not surprisingly, sureties are reluctant to incur bonding risk
             for a Chapter 11 debtor. The Debtors are not aware of any
      instance where a Chapter 11 debtor that is a large
            construction company has been able to obtain significant
bonding capacity while in bankruptcy.       

             In order to attempt to maintain and maximize value to the
                 greatest extent possible under the circumstances, the Debtors
           began negotiations with one of their principal existing
             sureties, Federal Insurance Company (with its affiliates,
              "Federal"), to be able to have new bonds issued during the
                Chapter 11 Cases. The Debtors believe that the ability to do
             so, if obtained, would greatly increase the chances to be
            awarded new projects during the Chapter 11 Cases, to the
ultimate benefit of all creditors.          

              As a result of these efforts, on June 8, 2001, the Debtors
               filed a motion (the "Federal Motion") seeking approval of a
                term sheet with Federal and to enter into a bonding facility
              (the "Federal Bonding Facility") consistent therewith. The
                  Federal Motion was approved be the Bankruptcy Court on July 9,
               2001. The Federal Bonding Facility essentially provides for
               the issuance of up to $100 million of new bonds for Company
            projects. The Federal Bonding Facility also contemplates
                  additional bonding for new projects of joint ventures in which
               the Company participates. Provisions for the replacement of
     certain existing Federal bonds are also included.

            The Federal Bonding Facility requires the Debtors to pay
                 various fees and expenses to Federal including a $1.5 million
                  commitment fee and a 1% fee on the amount of new bonds issued.
         Letter of credit and/or Cash collateralization of all
                stand-alone Company bonds in amounts averaging approximately
                  40% of the face amount of the bond is also required, with such
           collateral securing all new bond obligations as a pool.

               Further, the Federal Bonding Facility requires (i) that the
                  Debtors grant liens on certain assets to secure obligations to
                 Federal; (ii) the assumption of certain prepetition contracts
                under section 365 of the Bankruptcy Code; and (iii) that the
           Bankruptcy Court deem all Claims of Federal under bonds
            outstanding as of the Petition Date to be administrative
             priority claims under Section 503 of the Bankruptcy Code.

                The Federal Bonding Facility remains subject to agreement on
                final documentation by the Debtors, Federal, the DIP Lenders
and the Creditors' Committee.               

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F.       APPOINTMENT OF AN EXAMINER                                             

                  On May 25, 2001, Mitsubishi filed a motion seeking appointment
of an examiner under section 1104 of the Bankruptcy Code (the "Examiner         
Motion"). Mitsubishi requested that the examiner be appointed to conduct an     
investigation of, in essence, all of the Debtors' prepetition financial affairs.

                 On June 7, 2001, the Debtors filed a response to the Examiner
Motion. The Debtors did not believe that appointment of an examiner would be in 
the best interests of the Debtors' estates. Section 1104 of the Bankruptcy Code,
however, has been held by some courts to require appointment of an examiner     
under certain circumstances if requested by a party in interest.                

             As discussed in SECTION IV.C, the Debtors believe that an
expeditious completion of these Chapter 11 Cases is critical to preserving the  
Debtors' ongoing concern enterprise value. As a result, the Debtors concluded   
not to contest appointment of an examiner, to avoid the potential for delay if  
the Debtors were to litigate the Examiner Motion on its merits.                 

                 At a hearing conducted on June 13, 2001, the Bankruptcy Court
directed the United States Trustee to appoint an examiner. Mr. Jeffrey Truitt of
KPMG, and KPMG were appointed as examiners pursuant to an order entered by the  
Bankruptcy Court on June 28, 2001. The examiner is expected to file a report    
regarding the events leading to the commencement of the Chapter 11 Cases on or  
about August 22, 2001.                                                          

G.       NEGOTIATIONS AND AGREEMENT WITH MR. WASHINGTON                         

                  Mr. Washington has been Chairman of WGI since September, 1996.
He has a long history of involvement in the construction industry, and has been 
instrumental in the operating success of the Company. Mr. Washington indicated  
that he was interested in continuing his involvement with the Company, subject  
to agreement on compensation to be provided for his ongoing services. The       
Steering Committee for the Prepetition Lenders and the Debtors believe that Mr. 
Washington's continued commitment to the Company, both in terms of active       
participation in its management, as well as through ongoing economic investment,
will be highly beneficial to the Company's future prospects.                    

              As a result, shortly after the Petition Date, the Steering
Committee for the Prepetition Secured Lenders and Mr. Washington began          
negotiations regarding Mr. Washington's continued involvement with the Company  
during and after the Chapter 11 Cases. Mr. Washington's current equity stake in 
the Company - his ownership of Old Common Stock - will be cancelled under the   
Plan. Mr. Washington expressed, in those negotiations, his position that a      
condition to his willingness to continue to serve on the WGI's Board of         
Directors and allow the Company to utilize the "Washington" name and trademark, 
was dependent upon reaching agreement on the terms and conditions for           
consideration to be provided to him in exchange.                                

         The result of those negotiations is an agreement (the
"Washington Agreement"), which is embodied in the Plan. The Washington Agreement
is comprised of the following components:                                       

        1.       GRANT OF WASHINGTON STOCK OPTIONS - On the Effective Date, Mr
             Washington will be granted options to purchase New Common
                 Shares (the "Washington Stock Options"). The Washington Stock
            Options will consist of three (3) tranches of options as
follows:                                    

                  a.       The "Tranche A Washington Options" will be options to
                           purchase New Common Shares consisting of five percent
                           (5%) of the New Common Shares outstanding, on a fully
                  diluted basis, with a per share strike price
                       calculated based upon an assumed total enterprise
                       value for Reorganized WGI and its subsidiaries of
                          $300 million MINUS "Funded Debt" (as defined below).
                       The Tranche A Washington Options will have a term
                    expiring on the fifth (5th) anniversary of the
Effective Date.           

                  b.       The "Tranche B Washington Options" will be options to
                           purchase New Common Shares consisting of five percent
                           (5%) of the New Common Shares outstanding, on a fully
                  diluted basis, with a per share strike price
                        calculated based upon a total enterprise value for
                          Reorganized WGI and its subsidiaries of $550 million
                         MINUS Funded Debt. The Tranche B Washington Options
                  will have a term expiring on the fifth (5th)
        anniversary of the Effective Date.

                  c.       The "Tranche C Washington Options" will be options to
                           purchase New Common Shares consisting of five percent
                           (5%) of the New Common Shares outstanding, on a fully
                  diluted basis, with a per share strike price

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                       calculated based upon an assumed total enterprise
                       value for Reorganized WGI and its subsidiaries of
                   $720 million MINUS Funded Debt. The Tranche C
                         Washington Options will have a term expiring on the
                        seventh (7th) anniversary of the Effective Date. A
                    sample calculation of the strike price for the
                       Washington Stock Options is set forth on SCHEDULE
5.15(b) to the Plan.      

                  The Tranche A Washington Options, Tranche B Washington Options
                and Tranche C Washington Options will each vest in three (3)
                  equal installments on each of the Effective Date and the first
                  two (2) anniversaries of the Effective Date (if Mr. Washington
              is Chairman of the Board on such date); PROVIDED THAT, all
                such options will vest immediately upon Mr. Washington being
                 removed as Chairman of the Reorganized WGI Board of Directors
                  involuntarily, including through the failure to be renominated
to the Board.                               

                  For purposes of calculating the per share strike price for the
                 Washington Group Options, "Funded Debt" will be determined as
              of the Confirmation Date and includes the amount of funded
                  debt outstanding immediately after the Effective Date incurred
            to repay or retire outstanding obligations under the DIP
             Facility. Funded Debt shall be subject to adjustments, if
               necessary, to reflect a normalized level of working capital
          ("NLWC"). The NLWC will be determined by the financial
                advisors to the Debtors and the Prepetition Secured Lenders,
              and shall be set forth in the Confirmation Order. The NLWC
                 will be such working capital as would be normal and customary
         for the Debtors' businesses as they exist at the time
         consistent with industry standards, the Debtors' past
                 experience and benchmarking. The NLWC will be consistent with
             past practices and will neither accelerate nor defer cash
                receipts by, among other things, modifying billing cycles or
           the timing or terms of the collection of receivables or
                  dividends from joint ventures. The Debtors will continue their
           historical cash management procedures including issuing
          letters of credit for retainage on accounts receivable
                  collections. The NWLC will also adjust for any acceleration or
                 deferral of cash disbursements including, among other things,
                 modifying normal payment terms or timing of accounts payable,
            prepaying for services, pre-funding or deferring pension
                contributions or permitting substantial retainer payments or
               having cash balances higher or lower than customary. Funded
               debt and NLWC will be adjusted to exclude the impact of (A)
               the consolidation of previously unconsolidated investments,
             (B) acquisitions or dispositions of assets for fair value
                 outside the normal course of business, (C) other transactions
                  which would not be expected to modify enterprise value and (D)
               acquisition or disposition of fixed or other assets outside
the ordinary course of business.            

       2.       EARLY VESTING OF WASHINGTON STOCK OPTIONS - If, prior to the
                Effective Date, the Debtors enter into any agreement to sell
                 more than twenty-five (25%) of the value (based upon revenue)
                  of any business unit of the Debtors (excluding the Petroleum &
               Chemical business unit and the Mining division), (a) all of
                the Washington Stock Options will be issued and become fully
                 vested on the Effective Date, (b) the Debtors will accept Mr.
              Washington's resignation from the Board of WGI and (c) the
              Debtors shall not utilize the Washington name or trademark
              after the Effective Date (following a reasonable period of
transition).                                

  3.       PAYMENT UPON SALE OF ASSETS - If, prior to or as of the
                Effective Date (whether pursuant to a plan or reorganization
                or otherwise) substantially all of the assets of the Debtors
                are sold, Mr. Washington will receive a payment, in cash, in
                an amount equal to (i) the amount by which the aggregate net
               proceeds from such asset sales (including an adjustment for
                  liabilities assumed, if any, in excess of the NWLC) (the "Sale
               Proceeds") exceed $300 million multiplied by .05, plus (ii)
             the amount by which the Sale Proceeds exceed $550 million
              multiplied by .05, plus (iii) the amount by which the Sale
            Proceeds exceed $720 million multiplied by .05. A sample
            calculation is attached as Schedule 5.15(b) to the Plan.

        4.       VALUATION OF WASHINGTON STOCK OPTIONS - Lazard has valued the
                Washington Stock Options, based on a Black-Scholes analysis,
           to be between $ 35 million and $40 million. Neither the
           Creditors' Committee nor other parties in interest have
                 reviewed such valuation and reserve their rights to object to
such valuation.                             

      5.       BOARD, MANAGEMENT AND RELATED MATTERS - Mr. Washington will
                  remain as Chairman of the Board of Directors of WGI. The Board
                 of Directors of Reorganized WGI will be comprised of nine (9)
              directors. Mr. Washington will be Chairman of the Board of
                  Directors of Reorganized WGI without compensation for at least
                two (2) years after the Effective Date so long as desired by
                  the Board. Mr. Hanks and Mr. Batchelder will also be appointed
               to the Board of Directors of Reorganized WGI. The remaining
                 six (6) directors will be selected by the Prepetition Secured
             Lenders. SEE SECTION VI.J.1. In addition, pursuant to the
                Washington Agreement, the Plan provides for the continuation
                 of benefit arrangements for Mr. Washington in existence as of
                  the Petition Date, such as expense reimbursement practices and
ongoing indemnification rights.             

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   6.       PARTICIPATION IN THE DIP FACILITY - Under the Washington
               Agreement, Mr. Washington became a DIP Lender under the DIP
               Facility with a commitment of $10 million. As a DIP Lender,
               Mr. Washington participates in the DIP Facility on the same
                 terms as all other DIP Lenders; PROVIDED THAT, Mr. Washington
            does not participate on lender calls and may not vote on
matters requiring 100% DIP Lender approval. 

        7.       PERMITTED ACCUMULATION OF ADDITIONAL EQUITY - Pursuant to the
                  Washington Agreement, the Articles of Incorporation and Bylaws
                  of Reorganized WGI will be amended to permit Mr. Washington to
                acquire (directly or indirectly) up to 40% of the New Common
             Stock outstanding, on a fully diluted basis, assuming the
               exercise of the Washington Group Stock Options. SEE SECTION
VI.E.3.                                     

                  The Creditors' Committee and certain other parties in interest
have asserted that the Plan violates the absolute priority rule of section      
1129(b)(2)(B)(ii) of the Bankruptcy Code and two Supreme Court decisions        
because, if Class 7 votes against the Plan, under the Washington Agreement, Mr. 
Washington will receive despite the rejection of Class 7, a distribution of     
options to acquire New Common Shares and other benefits. The Debtors and the    
Prepetition Secured Lenders dispute this assertion and assert that the          
consideration to be provided to Mr. Washington is being provided solely in      
connection for future services to be rendered, and that he is not receiving or  
retaining any property under the Plan on account of his Old Common Stock, and   
that as a result, neither the absolute priority rule nor any Supreme Court      
decision is violated by the Plan whether or not Class 7 votes against the Plan. 

H.       SUMMARY OF CLAIMS PROCESS AND BAR DATE                                 

1.       SCHEDULES AND STATEMENTS OF FINANCIAL AFFAIRS        

             The Debtors filed Schedules of Assets and Liabilities and
Statements of Financial Affairs (collectively, the "Schedules and Statements")  
with the Bankruptcy Court on June 29, 2001. Among other things, the Schedules   
and Statements set forth the Claims of known creditors against the Debtors as of
the Petition Date, based upon the Debtors' books and records. The Schedules and 
Statements are consolidated for all Debtors, as authorized by order of the      
Bankruptcy Court.                                                               

2.       CLAIMS BAR DATE AND PROOFS OF CLAIM                  

         On June 15, 2001, the Debtors filed a motion with the
Bankruptcy Court to establish the general deadline for filing proofs of claim   
against the Debtors by those creditors required to do so (the "Bar Date"). On   
June 21, 2001 the Bankruptcy Court established the Bar Date as August 27, 2001. 
The Bankruptcy Court's order establishing the Bar Date (the "Bar Date Order")   
requires that the Debtors' Claims Agent provide notice of the Bar Date by       
mailing: (i) a notice of Bar Date; (ii) a proof of claim form; and (iii) a      
notice of either unliquidated, contingent and/or disputed claim or liquidated,  
non-contingent and undisputed claim upon the requisite persons or entities. The 
Bar Date and the Debtors' completion of their preliminary review of all Claims  
filed is anticipated to be completed after the Confirmation Date.               

               Based upon a review of their books and records, the Debtors
believe that the aggregate amount of Claims classified in Class 7 that will     
become Allowed Claims is in the range of $650 million to $1.1 billion. These    
Claims include (a) approximately $313 million of Claims under the Old Notes, (b)
the Lender Deficiency Claims and (c) Claims arising primarily out of pending    
litigation and other contingent and/or disputed Claims in amounts estimated to  
be between $250 to $700 million. While the Debtors have endeavored to estimate  
the amount of Claims that will ultimately be Allowed in Class 7 based upon      
evaluations of such Claims and historical results of litigation and settlements,
many such Claims are contingent, unliquidated and/or disputed and thus the      
amount that will ultimately be Allowed with respect to such Claims is highly    
speculative. Moreover, the Bar Date has not yet occurred, and thus the Debtors  
cannot know the amount of Claims that will ultimately be filed by creditors.    

                Under section 502(b)(9) of the Bankruptcy Code, governmental
units have until 180 days after the commencement of a case to file proofs of    
claim. Accordingly, the Bar Date for governmental units in these Chapter 11     
Cases is November 12, 2001. That date has not yet occurred and thus the Debtors 
cannot know the amount of Claims that will be ultimately filed by governmental  
units. Certain governmental units have indicated that they intend to file Claims
in excess of $200 million, which the Debtors may dispute in whole or in part.   

       Finally, Raytheon has indicated that it will assert
substantial Claims, which, to the extent Allowed and not subordinated, will be  
classified as Class 7. SEE SECTION VI.C.4 and APPENDIX D. While the Debtors     
intend to dispute the allowance of any Claims asserted by Raytheon on many      
grounds, including that the incurrence by the Debtors of indemnity obligations  
to Raytheon was a fraudulent transfer that is avoidable under applicable        
sections of the Bankruptcy Code, there can be no assurance that such efforts    
will be successful.                                                             

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The Debtors' estimate of the amount of Claims in Class 7 does not include any   
Claims asserted by Raytheon. SEE SECTION V.I.1.                                 

I.       SUMMARY OF MATERIAL LITIGATION MATTERS                                 

                 During the Chapter 11 Cases to date, the Debtors commenced or
were involved in a number of lawsuits. In addition, the Debtors are             
investigating other potential causes of action arising out of transactions      
involving Raytheon and other third parties.                                     

1.       CLAIMS AGAINST RAYTHEON                              

              On March 8, 2001, WGI filed suit against Raytheon and RECI
alleging fraud and seeking rescission and, alternatively, unspecified damages   
and specific performance for breach of the Stock Purchase Agreement in the Idaho
Court. For a description of the Raytheon transaction and its effects upon the   
Debtors, see SECTION III.A and SECTION IV.A. The Debtors believe Raytheon       
suppressed information that would lead a potential purchaser to discern the     
magnitude of the significant adverse problems facing the RE&C Businesses. During
the course of negotiations and due diligence, Raytheon presented historical     
data, audited and unaudited financial statements, and projections that portrayed
a healthy company with strong earnings potential going forward.                 

            The Debtors believe that the Company's due diligence was
hampered by Raytheon's deliberate withholding of what later turned out to be    
material information by Raytheon limiting WGI's access to selected individuals, 
who Raytheon knew were not the key individuals, and by Raytheon permitting site 
visits to only a limited number of projects. Due diligence was further hampered 
by Raytheon's intentional misrepresentations about material facts with respect  
to projects, as well as the company's historical financial statements and       
financial projections. The Debtors believe that, throughout the period of due   
diligence, and, in fact, through the closing of the transaction, Raytheon       
continued to misrepresent the accuracy of the forecasted EBITDA potential of the
RE&C Businesses by, among other things (i) refusing to permit the RECI          
Subsidiaries' project management to recognize material, known, cost growth on   
projects (thereby retaining false profit or low loss forecasts); (ii) violating 
Generally Accepted Accounting Principles by inflating revenue through           
unrealistic assumptions regarding expected claims recovery, which expectations  
were not achievable and which quickly had to be reversed by WGI; (iii)          
increasing EBITDA by assuming unrealistic expense reductions (e.g., removing    
training, facility and salary costs) which were vital to an on-going sustainable
business; and (iv) by failing to take into account overhead under absorption    
rates in several facilities, all the while representing to WGI that projected   
EBITDA from ongoing RE&C Businesses' operations would be at least $140 million  
annually. Additionally, Raytheon justified limiting due diligence by            
representing that any discrepancies in the valuation of assets would be cured   
post-closing by virtue of a purchase price adjustment provision that was        
included in the Stock Purchase Agreement.                                       

                  As a result of its continuing post-acquisition in-depth review
of the RE&C Businesses assets acquired, the Debtors believe that Raytheon       
management consistently engaged in inappropriate accounting practices and       
intentional earnings manipulation by overstating revenue, understating costs,   
avoiding recognition of losses and thereby severely overstating profits and     
understating losses on numerous projects.                                       

           WGI's suit sought a preliminary injunction and specific
performance of the purchase price adjustment provision of the Stock Purchase    
Agreement, as well as unspecified damages or recision as a result of alleged    
fraud. Raytheon moved to dismiss the suit (the "Motion to Dismiss") or, in the  
alternative, stay the suit in lieu of an arbitration proceeding that it had     
previously commenced. The Idaho Court denied the Motion to Dismiss, but stayed  
that portion of WGI's complaint relating to the fraud allegations. The Idaho    
Court allowed WGI's causes of action relating to specific performance to        
proceed, however, and hearings were held on May 2nd and 3rd, 2001 on WGI's      
specific performance claims. The Idaho Court ruled in favor of WGI and issued a 
mandatory injunction ordering Raytheon to produce those documents required to   
start the purchase price adjustment process. By Order dated June 1, 2001, the   
Idaho Court further ordered that Raytheon produce an audited and/or unaudited   
balance sheet and other related documents required under the Stock Purchase     
Agreement by June 5, 2001 and appointed William Palmer & Associates as an       
independent accounting firm to assist in resolving disputes in the purchase     
price adjustment process. Raytheon produced an unaudited April 30, 2000 balance 
sheet and a cut-off date balance sheet on June 5, 2001. WGI responded to those  
documents on June 29, 2001. WGI and Raytheon are required to present materials  
to the independent accountant supportive of their respective positions on or    
before July 30, 2001.                                                           

             On or before August 3, 2001, the Debtors will commence an
Adversary Proceeding against Raytheon and its subsidiaries in the Bankruptcy    
Court under applicable sections of the Bankruptcy Code, seeking to, among other 
things, recover transfers and avoid obligations that the Debtors believe        
constitute fraudulent transfers. The Adversary Proceeding is expected to allege,
among other things, that Raytheon was the transferee or beneficiary of numerous 
transfers that are avoidable under sections 544, 547, 548 and 550 of the        
Bankruptcy Code. That Adversary Proceeding will also seek to avoid as a         
fraudulent transfer the incurrence of any obligations to Raytheon under the     
Stock Purchase Agreement or related documents, such as indemnity obligations    
asserted by Raytheon. The Debtors believe that these claims have substantial    
merit and will be asserted in amounts aggregating hundreds of millions of       
dollars. The Debtors expect                                                     

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Raytheon to dispute all asserted claims against it, to assert hundreds of       
millions of dollars in claims against the Debtors, and to take the position that
it is entitled to vote on the Plan as a Class 7 creditor. SEE APPENDIX D for a  
statement of position by Raytheon.                                              

               Section 502(d) of the Bankruptcy Code provides, among other
things, that any claims of an entity (a) from which property is recoverable     
under section 550, or (b) that is a transferee of a recoverable transfer, shall 
be disallowed. Accordingly, the Debtors believe and intend to take the position 
that (i) any claims that might be asserted by Raytheon or its subsidiaries      
against the Debtors must be disallowed unless and until Raytheon and its        
subsidiaries pay the amounts for which the Debtors assert they are liable on    
account of, among other things, fraudulent transfers, and (ii) Raytheon and its 
subsidiaries are not entitled to vote on the Plan on account of any such claims 
they might assert against the Debtors. The Bankruptcy Court has set a hearing to
estimate Raytheon's alleged Claims for voting purposes only, for August 28,     
2001, in accordance with Bankruptcy Rule 3018. There can be no assurance as to  
the amount of claims (if any), the Bankruptcy Court will allow Raytheon for     
voting purposes.                                                                

             As described in SECTION VII.B, all Company claims against
Raytheon and its subsidiaries, including those described above, will be         
transferred to the WGI Creditor Trust, which will be funded with $20 million to 
pursue such claims.                                                             

2.       MITSUBISHI LITIGATION                                

                 On May 14, 2001, the day the Debtors commenced the Chapter 11
Cases, Mitsubishi filed an ex parte motion (the "Prohibition Motion") under     
section 363(e) of the Bankruptcy Code, together with supporting memorandum,     
affidavits, and discovery materials, with the Bankruptcy Court to prohibit the  
Debtors' use of $191,230,825 paid to the Debtors by Sithe relating to two power 
plant projects in Massachusetts. On the Petition Date, the Debtors' cash on hand
was approximately $11 million.                                                  

                 Mitsubishi, a member of the Creditors' Committee, is a vendor
that sold equipment to the Debtors in connection with the Sithe projects        
pursuant to agreements signed by RE&C and later assumed by WGI. Mitsubishi      
asserts a substantial claim for the unpaid balance owed for the equipment.      

           In the Prohibition Motion, Mitsubishi sought to collect
payment on its claim by impressing current and future cash of the Debtors with a
trust arising under New York lien law, agency law, the doctrine of earmarking,  
and constructive trust theories. Mitsubishi also sought an accounting of funds  
received from the Sithe projects and adequate protection of its interests in the
Sithe payments. Pending final resolution of this litigation, the Debtors agreed 
to maintain minimum cash balances of approximately $11 million.                 

                  Payment of the Mitsubishi's claim has been fully guaranteed by
Raytheon pursuant to guarantees executed at the inception of the Sithe projects.
Indeed, the Debtors believe that approximately $135 million has already been    
paid to Mitsubishi and substantially all of the balance is anticipated to be    
paid in the near future.                                                        

                 The Debtors contested the validity of Mitsubishi's claims, as
set forth in detail in the pleadings filed by the Debtors in the Chapter 11     
Cases, on numerous legal and factual grounds. On June 13, 2001, the Bankruptcy  
Court denied the Prohibition Motion and related requests by Mitsubishi in their 
entirety. On June 20, 2001, Mitsubishi filed a notice of appeal regarding the   
Bankruptcy Court's decision, which appeal is pending. Mitsubishi also applied to
the district court for a stay of Judge Zive's ruling pending appeal. Washington 
opposed the application but agreed to maintain minimum cash balances of         
approximately $11 million through July 31, 2001 to allow time for the district  
court to rule on Mitsubishi's application. Mitsubishi's application for a stay  
pending appeal was granted by the district court on July 19, 2001.              

           Mitsubishi has also asserted that it has certain claims
against certain of the Debtors' officers and directors as a result of the       
dissipation of such trust funds. The Debtors dispute that Mitsubishi has any    
valid claims against any officer or director, but no officer or director is     
receiving a discharge or release of any non-derivative, direct creditor claim   
under the Plan. SEE SECTION VI.H. Officers and directors' rights to be          
indemnified be the Debtors, are being assumed under the Plan and thus if the    
Plan is confirmed will be obligations of the Reorganized Debtors. SEE SECTIONS  
VI.H AND VI.J.4.                                                                

J.       FOREIGN ACTIONS                                                        

                 On May 29, 2001, Washington International B.V., a Netherlands
company and indirect wholly owned subsidiary of WGI, which is not a Debtor in   
these Chapter 11 Cases, was granted a provisional suspension of payment by the  
District Court of s-Gravenhage, the Netherlands, which provisional suspension of
payment imposes a moratorium on non-preferential and unsecured creditors' claims
as of the date of the suspension. This entity will be liquidated during 2001.   
The Debtors do not believe that this has had or will have a material impact on  
the Debtors or the Reorganized Debtors.                                         

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K.       MOTION OF THE CREDITORS' COMMITTEE TO TERMINATE THE DEBTORS' EXCLUSIVE 
PERIOD TO FILE AND SOLICIT ACCEPTANCES OF THE PLAN                              

               On July 5, 2001, the Creditors' Committee filed a motion to
terminate the Debtors' exclusive period under section 1121(b) of the Bankruptcy 
Code to file a reorganization plan and to obtain its acceptance (the            
"Exclusivity Motion"). The Creditors' Committee has asserted a number of grounds
in support of the Exclusivity Motion, each of which is contested by the Debtors.
The Debtors do not believe that there are sufficient grounds to terminate their 
exclusive periods to file and solicit acceptances of the Plan. The Bankruptcy   
Court conducted a hearing on the Exclusivity Motion and the Debtors' objection  
thereto on July 24, 2001. The Exclusivity Motion was continued by agreement     
until September 6, 2001. If the Exclusivity Motion is granted, other parties in 
interest, including the Creditors' Committee, would have the right to file      
competing reorganization plans.                                                 

L.       DEVELOPMENT AND SUMMARY OF THE BUSINESS PLAN                           

               With the assistance of their financial advisors, investment
bankers and legal counsel, the Debtors have developed a long-term Business      
Plan. A summary of the principal components of the Business Plan, and a         
description of the principal assumptions underlying the Business Plan, is set   
forth below.                                                                    

              Attached to the Disclosure Statement as Appendix C are the
Projections for the Debtors on a consolidated basis through fiscal 2004, based  
upon the Business Plan. These projections have not been reviewed nor commented  
on by the Creditors' Committee and other parties in interest.                   

1.       SUMMARY OF THE BUSINESS PLAN                         

               Reorganized WGI will continue to be a leading international
provider of design, engineering, construction, construction management,         
facilities and operations management, environmental remediation and mining      
services to the world's largest manufacturers, power companies and utilities and
industrial companies. Reorganized WGI will have four operating divisions:       

                 POWER (Princeton, NJ) - will provide design, new construction
             and plant retrofit services to domestic and international
       power generating customers, including utilities and
independent power producers.                

                  INFRASTRUCTURE & MINING (Boise, ID) - will provide heavy civil
               engineering services and serves as a general contractor for
           infrastructure projects in the transportation (bridges,
                 highways, mass transit), marine and air (ports and terminals)
              and water resources (reservoirs, hydroelectric, pipelines)
markets.                                    

              GOVERNMENT (Aiken, SC)- will provide technical services to
                United States Department of Energy ("DOE") and United States
                  Department of Defense ("DOD"), such as environmental clean-up,
                  chemical demilitarization and nuclear fuel reprocessing. These
             services include the design, construction, management and
           operation, dismantling, decommission ing and closure of
government facilities.                      

     INDUSTRIAL/PROCESS (Cleveland, OH) - will provide
                 design/engineering, procurement and construction services, in
                addition to consulting services, to Fortune 500 companies in
                 the general manufacturing, food and beverage, pharmaceutical,
             technology, pulp and paper and other markets. The current
       Petroleum & Chemicals group will be merged with the
Industrial/Process group.                   

                 The Business Plan contemplates a number of strategic actions,
the most significant of which are:                                              

                 o        Fully integrating Old MK, the Westinghouse Group and
                         the RE&C Businesses into the four divisions, Power,
                           Infrastructure, Government and Industrial/Process, to
              maximize business development, improving
                   profitability and maintaining a positive work
                       environment for the employees of Reorganized WGI.

              o        Concentrating the Company's efforts on the higher
                           profit, higher profile projects that will provide the
               most value to the Company's stakeholders.

             o        Focusing on developing the business across North
                         America with select pursuit of global opportunities
                           during the short term and expanding Reorganized WGI's
         global presence over the long term.

                 o        Restructuring the business groups to be organized by
                   function (market/industry/client) rather than
geographic                

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location.                 

                o        Creating a disciplined and profit oriented business
                         mindset driven by a professional sales organization
                 with the ability to provide project finance
                      capability where needed and ultimately expanding
                          project financing capability to program development.

                o        Revamping information technology ("IT") systems and
                     process in order to affect savings and generate
online data.              

           o        Changing cost structure to realize significant
overhead savings.         

              o        Consolidating or closing overlapping/unprofitable
                          offices and expanding the focus on client reimbursed
                     outlying project offices. In addition, reducing
                    annual real estate costs of $60 million to $40
million.                  

            o        Establishing operation centers in the Northeast
                   Corridor, the Midwest and the West for shared
                   services (i.e. Finance, Administration, Human
                      Resources, Legal and IT) and common engineering,
               procurement and cost scheduling services.

                 WGI management believes that Reorganized WGI will emerge from
chapter 11 with significant opportunities for growth in each of its four        
divisions. The growth opportunities for each of the four divisions of           
Reorganized WGI, together with the strategic initiatives contemplated by        
Reorganized WGI to realize such growth opportunities, are summarized below.     

a.       POWER                              

                         (i)      Growth Opportunities - The Debtors believe
                               that the power group ("Power") has many
                                   opportunities for growth as a result of the
  following:

                                ANTICIPATED ENERGY SHORTAGE - Currently,
                                  demand for electricity outpaces the growth
                               in supply. Management believes that the
                              global market for Power's construction
                                  services could exceed $30 billion by 2010.
                                 Power provides a platform for Reorganized
                                   WGI to take advantage of the most favorable
                    power market in two decades.

                                STRENGTHENING OF SERVICES INDUSTRY - The
                                    recent mergers and acquisitions activity and
                             the divestitures of utility assets to
                                   private power generators will bring about a
                                    wave of outsourcing possibilities for Power.
                                   Alliances are key to the outsourcing market
                                for nuclear services, integrated design,
                              maintenance and component replacement.
                                 Additionally, Power is one of two primary
                       contractors for steam generator
                                    replacements, an expanding market due to the
                              rise in nuclear plant life extensions.

                                    POWER'S EXTENSIVE, INTEGRATED CAPABILITIES -
                                   Power offers an extensive, integrated array
                            of services in all stages of a power
                                  project, including design and engineering,
                                construction, operation and maintenance,
                                  closure and decommissioning. The appeal of
                                  one-stop shopping also helps Power develop
                               long-term relationships with customers.
                                  Power's full-service approach allows it to
                                   bid for and complete the most complex jobs.
                                 Power's large technical base of engineers
                                    provides instant capability for the largest,
                                most complex projects and an engineering
                           capacity few competitors can match.
                               Additionally, Power is well situated to
                                  benefit as more project owners turn to the
                            design-build and turnkey concepts of
                                  developing projects to improve the quality
                             of execution, speed of delivery, cost
                                   effectiveness and enhancement of contractor
       accountability.

                                 MARKET REPUTATION - As the fourth largest
                                    engineering, construction and operations and
                                  maintenance company in the power business,
                            Power is uniquely positioned to take
                                    advantage of the recent upswing in the power
                                  market. Power maintains its leading market
                               position by forging strong customer and
                                  partner alliances, by maintaining low cost
                                  engineering centers in Europe and Asia and
                                by having readily deployable experienced
                        turnkey project execution teams.

                          SHIFT IN THE MARKETPLACE - As U.S.
                                  developers combine with owners of licensed
                                   project sites, Power has the opportunity to
                                   build a profitable backlog of new work very
                          rapidly. With contractor resources

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                                in the U.S. near capacity, opportunities
                             exist for negotiated contracts due to
                                limited competition, multiple orders and
                                  increased margins. These opportunities are
                             less risky than the lump sum, turnkey
                       projects that have historically
                   characterized the industry.

                          POTENTIAL NEW PROJECTS - Power has
                                    substantial new project opportunities. Those
                                 opportunities highlight the importance of
                                    Power's technical expertise and full-service
                                    capabilities. Realization of the new project
                                 opportunities will effectuate the revenue
                               growth projected by Power over the 2002
    fiscal year.

                         (ii)     Strategic Initiatives - Due to marketplace
                               shifts, the power industry has become a
                              seller's market. In a seller's market,
                         projects are awarded based upon a
                              contractor's record of performance and
                                 experience level. Power is poised to take
                                 advantage of this market dynamic and will
                          pursue projects with the following
                          characteristics: cost-reimbursable
                            contracts, target/incentive pricing,
                                  "damages" limited to profit impact, and no
                           guarantee of equipment performance.

                                Additionally, Power is focusing on doing
                              more work on a joint venture basis. By
                              aligning with the proper joint venture
                               partner, access to the bonding capacity
                           becomes easier. Power will focus on
                                  developing partnerships/alliances with key
                              customers to design and build multiple
 projects.

                                   Power's management is dedicated to reducing
                            costs within the group. Cost cutting
                                   measures currently underway are expected to
                                   reduce general overhead costs from a fiscal
                                    2000 level of $47 million to a projected run
                            rate beginning in fiscal 2002 of $27
million.

b.       INFRASTRUCTURE AND MINING          

                         (i)      Growth Opportunities - The Debtors believe
                                 that Infrastructure and Mining ("I&M") is
                                   well positioned in the long term because it
                                   offers clients the most comprehensive range
                              of services available in the business,
                          including project conception, cost
                          estimation, design/engineering and
                               construction, as well as operations and
                                  maintenance. Opportunities for the segment
                          are being driven by the following:

                                  TRANSPORTATION EQUITY ACT ("TEA") - In the
                                highway market, the Company's management
                                    forecasts that industry fundamentals will be
                                aided by the recently enacted TEA and is
                                 projecting growth of 8% annually. In this
                                  market, I&M has begun to focus itself more
                                   on design-build "mega" projects and less on
                         smaller, highly competitive basic
                                  construction projects where small regional
                          contractors can undercut I&M bids.

                                 AIRPORT EXPANSION - The airport market is
                                  another strategic focus for I&M, primarily
                                due to the tremendous need for increased
                                 capacity. With the introduction of recent
                                    legislation, management expects this segment
                                  to grow at a rate of 10% annually. In this
                             market, providing a full continuum of
                          services (design, construction and
                                 operations and maintenance) distinguishes
                 I&M from its competition.

                                 RAIL AND TRANSIT UPGRADES AND EXPANSION -
                                    The rail and transit market is also expected
                                    to grow at 8% in the coming years and offers
                           strong opportunities for design and
                             construction as well as operation and
                               maintenance ("O&M") services. Moreover,
                                 there are few competitors who can provide
                                 the necessary services needed to complete
                              the major projects without partnering.

                                    DEMAND FOR CONTRACT MINING SERVICES - Demand
                                 for contract mining services is currently
                                 being driven by rising coal prices. I&M's
                                 position is enhanced in this arena due to
                                its ability to provide "cradle-to-grave"
                               services that few other competitors can
offer.  

                         (ii)     Strategic Initiatives - I&M is planning to
                                take advantage of its ability to provide
                             total project capabilities, including
                                    project development, financing, design-build
                            and comprehensive service package by
                        competing for high margin "mega"
                             infrastructure projects. These "mega"
                                   projects, defined as having contract values
                                in excess of $100 million, are generally
                              unavailable to smaller engineering and
                             construction firms that are unable to
                                    provide comprehensive capabilities. I&M will
      systematically

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                          reduce its emphasis on stand-alone
                                    construction and design services, refocusing
                           these resources on more profitable,
                               design-build projects. I&M will use its
                                    project presence in the Pacific Rim, Europe,
                       and South America to expand its
                                international opportunity base for large
 projects.

                                  Additionally, I&M is focusing on strategic
                                   joint ventures. By aligning with the proper
                                   joint venture partner, I&M will continue to
                                  be able to compete for a wide selection of
                                  the "mega" projects. Aligning with a joint
                            venture partner allows for access to
                                   selected market niches and bonding required
                        on most infrastructure projects.

c.       GOVERNMENT                         

                         (i)      Growth Opportunities - The Debtors believe
                                that the Government group ("Government")
                                  should benefit from its strong position in
                                the marketplace and several factors that
                                will provide Government with significant
                            opportunities to grow. These factors
include:

                                   INCREASING DOE BUDGET - Over the last three
                                    years, DOE budgets have grown by $1 billion.
                                    Trends in the DOE market are being driven by
                              the need to replace the aging domestic
                         infrastructure; national security
                          enhancements; hazardous facilities
                             operations (particularly at the DOE's
                                 national laboratories); integrated safety
                                  management improvements; and management of
                                   nonproliferation programs for materials and
                              weapons of mass destruction (driven by
                          international political pressure).

                           GLOBAL DEMILITARIZATION -The Global
                            Demilitarization market is expecting
                         significant funding increases for
                                demilitarization and countering nuclear,
                              biological and chemical ("NBC") weapon
                             threats. Approximately $11 billion of
                                   anti-terrorism funding will create the need
                              for NBC knowledge, weapon effects, and
                                    emergency planning consulting. Additionally,
                                    global plutonium disposition treaties create
                                   several opportunities for Government, given
                       its unique plutonium expertise.

                                   Government currently commands 70 percent of
                             the chemical demilitarization market.
                               Government manages four of six chemical
                                   demilitarization sites for the U.S. Army as
                             well as a site in the Ukraine that is
                                    managed through a joint venture. This market
                              is projected to continue to be strong,
                                  especially on the international front. Key
                                 prospects are the demilitarization of the
                                    former Soviet Union and the cleanup of World
                              War II vintage chemical weapons in the
                                Peoples' Republic of China. Government's
                                   excellent track record, technical expertise
                                and geographic reach position it well to
                          capture new business in unexploded
            ordinance/de-mining.

                               RETIREMENT OF AGING NUCLEAR PLANTS -The
                                Energy Information Agency estimates that
                                approximately 40% of currently operating
                                 nuclear capacity will be retired by 2020.
                            This phenomenon creates a tremendous
                   opportunity for Government.

                           (ii)     Strategic Initiatives - Government functions
                            in all stages of the life cycle of a
                          facility, including the design and
                                engineering, construction, operation and
                                 maintenance, closure and decommissioning.
                                   Government is planning to take advantage of
                                its ability to provide a broader service
                               offering than any of its competitors by
                          pursuing projects that many of its
                                  competitors cannot perform. These projects
                               include managing complex facilities and
                                  working with dangerous materials in public
arenas. 

                                    Government will also exploit the opportunity
                                  develop and expand its commercial business
                                    division. The commercial business segment of
                           the industry has substantial growth
                                   potential. Government intends to expand its
                              relationship with the DOE and grow its
                            demilitarization and DOD businesses.
                                  Additionally, as part of the overall asset
                                  disposition plan to improve liquidity, the
                                    Company is planning to sell its share of its
                    electro-mechanical division.

                           Restructuring Government will yield
                                  approximately $6 million in reduced annual
                              overhead expenses. The savings will be
                                 generated primarily from reduction in the
                              geographic "footprint" of the unit and
                personnel restructuring.

                                    Government is currently located in 19 cities
                                 throughout the United States in 39 leased
  facilities

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                                   amounting to more than 500,000 square feet.
                                 The annual rental cost for such leases is
                                approximately $7 million. As part of the
                             restructuring process, the geographic
                                  "footprint" of Government will be reduced,
                                resulting in approximately $1 million in
                          annual savings in rental payments.

                          A review of the Government Group's
                                    organizational structure is in process in an
                                 effort to determine the required resource
                                load, and to exact efficiencies. Certain
                               headcount reduction initiatives will be
                                  commenced, including attrition management;
                               elimination of duplicate functions; and
                                   elimination of positions. It is anticipated
                              that this review will result in annual
                 savings of $2.75 million.

                           Restructuring will yield additional
                             administrative savings because of the
                                  reduced geographic "footprint" and through
                                optimizing the organizational structure.
                                   Those savings will total approximately $2.4
         million annually.

d.       INDUSTRIAL PROCESS                 

                    (i)      Growth Opportunities - The Industrial
                                  Process group ("I/P") is focused on adding
                            value for customers and becoming the
                               engineering/contractor of choice. I/P's
                                    growth opportunities focus on the following:

                              EXPANSION OF THE PORTFOLIO OF SERVICES
                            PROVIDED TO EXISTING CUSTOMERS - I/P
                                    currently provides only specific services to
                         their core customers. Significant
                                  opportunities exist to expand the services
                                    provided to its core customers. For example,
                                  a key growth market exists in the areas of
                                 operations and maintenance and facilities
                                   management. I/P has the unique advantage of
                               operating in both a union and non-union
                                  mode, and its broad geographic base allows
                                  it to serve clients worldwide. I/P intends
                                    to initiate a strong "cross-selling" program
             with its key clients.

                             CONTINUED EXCELLENCE AND EXPANSION IN
                               EXISTING CORE MARKETS - Core markets of
                                  biotechnology/pharmaceuticals, automotive,
                                  chemical process, food & beverage/consumer
                                    products, and pulp and paper account for 70%
         of sales for I/P.

                                  BIOTECHNOLOGY/PHARMACEUTICAL MARKET - This
                                  market has the strongest growth potential.
                                 All of the major customers in this market
                                  are multinationals, and to be a key player
                                in this market you must be able to serve
                                   customers in the United States, Puerto Rico
                            and Ireland. I/P is ideally situated
                                geographically to meet this demand, with
                           core pharmaceutical capabilities in
                            Philadelphia to cover the New Jersey
                           concentration of clients and strong
                              operating capabilities in Puerto Rico,
                        London and County Cork, Ireland.
                                   Additionally, I/P's strong Validation Group
                                   helps open doors with new clients. With 275
                                    employees and a 15% market share, I/P is the
                               leader in biotechnology/pharmaceuticals
            validation services.

                                 AUTOMOTIVE MARKET - Opportunities in this
                                  market will be fueled by technology driven
                                 projects and a continuous stream of plant
                                    modifications and upgrades as new models are
   introduced.

                                 CHEMICAL PROCESS MARKET - In this market,
                                   DuPont has been an I/P alliance partner for
                               over 15 years. In the Fall of 2000, I/P
                                  received its fifth consecutive "Governor's
                                    Safety Council Award" for outstanding safety
                                 performance at DuPont's Parkersburg, West
                                 Virginia plant site. I/P's overall safety
                                  record translates to lower labor insurance
                      (Workers' Compensation) costs.

                                    FOOD AND BEVERAGE/CONSUMER PRODUCTS MARKET -
                                  This is another core market for I/P. Major
                       customers in the market include
                            Anheuser-Busch, Kraft and Pillsbury.

                             PULP AND PAPER MARKET - With a strong
                              position in this market, I/P stands to
                                  benefit the most among its key competitors
                       as market fundamentals improve.

                                   FURTHER UTILIZATION OF THE CAPABILITIES AND
                                    RELATIONSHIPS ADDED BY RECENT ACQUISITIONS -
                                    The addition of Rust Constructors as part of
                                the acquisition of RE&C has given I/P an
                                immediate presence in the Southeast U.S.
                                    through its Birmingham, Alabama office. Rust
                     Constructors' non-union labor

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                         gives I/P "double-breasted" labor
                                    capabilities and allows customers to rely on
                                I/P's services regardless of a project's
                                locality and specific laws. This creates
                                 opportunities for I/P as existing clients
                              relocate or expand to the Southeast (a
                                   traditionally non-union labor market) where
                                   I/P has historically been unable to compete
     for projects.

                             NATURAL GAS PROCESSING - Based on the
                                    projected increase in consumption of natural
                                    gas over the next decade, I/P should be able
                              to exploit its strong position in this
market. 

               (ii)     Strategic Initiatives - I/P is a
                                 relationship-oriented business based upon
                                    long-term alliances and partnerships. I/P is
                        a service-oriented business with
                        design/engineering, procurement,
                                 construction management, quality programs
                         (testing), construction, facility
                                   management, O&M and validation performed on
                     a cost-plus, risk-free basis.

                                    I/P plans on taking advantage of its breadth
                                    of services by providing "one-stop shopping"
                                 for its customers. This will allow I/P to
                              build and expand on long-term customer
                                 relationships which forms the core of its
                                    business - 75% of I/P's revenues are derived
                                from repeat customers. I/P also plans on
                          differentiating itself through its
                                    "double-breasted" labor capability, mobility
                                 and expertise of its workforce and strong
                  track record of execution.

                                 Currently, I/P's mix of work is split 85%
                                   domestic and 15% international (outside the
                                    continental U.S.). Domestically, I/P now has
                                    a very strong presence in the Southeast U.S.
                             due to Rust Contractors. I/P plans on
                                dominating the Southeast corridor of the
                               U.S. market by leveraging Rust's market
                                  strength. I/P's strategy for international
                                    work is to grow with its U.S. and U.K.-based
                                  clients who are expanding their operations
                      into other areas of the world.

                                    In terms of the integration of the Petroleum
                                  and Chemical division ("P/C") into I/P and
                                   as part of the overall asset disposition to
                                  improve WGI's liquidity, the Company plans
                            to sell the Cambridge, Massachusetts
                                  Technology Center. After that disposition,
                                    the remaining business of P/C will primarily
                                be a Denver-based natural gas processing
                            activity. The natural gas processing
                                   division will be folded into the I/P group.
                                 This will result in annual G&A savings of
                 approximately $7 million.

     e.       CAPITAL STRUCTURE / BONDING AVAILABILITY

            The Company has been and will continue to negotiate with
surety companies to provide surety bonds during and after the Chapter 11 Cases. 
In order to obtain surety credit on a "normalized" basis, the surety companies  
have indicated that they will take several factors into consideration. They have
indicated that they look at the following factors both alone and in conjunction 
with the status of the overall Company: (1) tangible net worth; (2) credit      
availability; (3) adequate working capital; (4) debt coverage; and (5) debt     
rating.                                                                         

              If the Company does not meet certain standards, the surety
companies may limit bonding, require collateralization with letters of credit to
support the issuance of new surety bonds, and charge higher than "normal"       
premiums.                                                                       

     Historically, the Company's bonding need has been
approximately 10-15% of total revenue. Based on the projected revenue the       
Company estimates that it will need to obtain between $300-$500 million of      
surety bonds in 2002.                                                           

f.       EXIT FINANCING                     

                The Company intends to seek an Exit Facility consisting of a
revolver in the amount of approximately $350 million, but there can be no       
assurance that an Exit Facility in this amount will be obtained. The Debtors    
believe that the Plan is feasible within the meaning of section 1129 of the     
Bankruptcy Code even if a smaller Exit Facility is ultimately obtained. The Exit
Facility is anticipated to be utilized as follows:                              

                         (i)      Repay outstanding funded obligations under
                                  the DIP Facility and fund the WGI Creditor
                            Trust (projected to be $50 million).

                          (ii)     Replace or backstop all outstanding letters
                              of credit issued under the Prepetition
                              Credit Agreement (projected to be $125
                                    million at exit), all outstanding letters of
                            credit issued under the DIP Facility

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                                 (projected to be $44 million at exit), as
                           well as all future letter of credit
     requirements.

                  The balance of the Exit Facility is anticipated to be used to:

                   (i)      Fund an increase in working capital.

                         (ii)     Fund working capital fluctuations that may
                                   occur due to timing differences in receipts
          and disbursements.

       (iii)    Provide excess capacity.

           As discussed in SECTION V.C.3, the Debtors have not yet
received any commitment for an Exit Facility, but have commenced discussions    
with the DIP Lenders, the Prepetition Secured Lenders, and other financial      
institutions.                                                                   

1.       FINANCIAL HIGHLIGHTS                                 

             The Projections were prepared by year for the period from
December 1, 2001 through November 30, 2004. Each group (Power, Infrastructure   
and Mining, Government and Industrial Process) prepared their own projected     
balance sheets, income statements and schedules of receipts and disbursements.  
The schedules of receipts and disbursements consist of each group's significant 
current projects. The Company's corporate finance team consolidated each group's
projected balance sheets, income statements and schedules of receipts and       
disbursements and prepared a statement of cash flows for each group and a       
consolidated statement of cash flows. The following are highlights from the     
Projections:                                                                    

              Total revenue is expected to decline in the amount of $500
million from fiscal 2001 to 2002 due, in part, to the following:                

                  a.       Power's projected revenue is expected to decline $112
                   million due to the rejection/reformation of 4
                       contracts acquired through the acquisition of the
                       RE&C Businesses and the inability to win new work
      during the period of bankruptcy.

                  b.       Government's projected revenue is expected to decline
                          by approximately $290 million due to the sale of the
                          electro-mechanical division during the first quarter
                           of fiscal 2002 and the completion of the construction
                         phase of the projects at Umatilla and Anniston, and
                     the reduced activity at Weldon Spring and RMRS.

              c.       I/P's projected revenue is expected to decline by
                      approximately $95 million due to the sale of the
                      petroleum and chemical technology center and the
                           impact of bankruptcy proceedings on the petroleum and
                          chemical business in Europe. Additionally I/P does a
                          significant amount of business with companies in the
                        telecom industry, specifically Lucent and Corning,
                         who have delayed and or cancelled certain projects.

Total revenue is expected to increase by $65 million from fiscal 2002 to 2003.  

                 a.       Power's projected revenue is expected to increase by
                      approximately $114 million due to its success in
                         booking new work, specifically its ability to win 2
                          "mega" projects (>$250 million) in 2002 and 4 "mega"
                       projects in 2003, as Power is able to reestablish
                         itself in the marketplace. The increase is also due
                       to the continued strong market conditions and the
                      lack of excess capacity within the power sector.

             b.       Infrastructure and Mining's projected revenue is
                         expected to decline $84 million due to the expected
                    inability of Infrastructure and Mining to book
                   sufficient new work during and just after the
                          bankruptcy in order to maintain an adequate backlog.
                         Typically, large Infrastructure and Mining projects
                          require lead times of 6-9 months. Infrastructure and
                        Mining revenue is not expected to be significantly
                         affected during fiscal 2002, as they complete their
existing backlog.         

                  c.       I/P's projected revenues are expected to increase $68
                           million as I/P is expected to be able to re-establish
                        itself in the marketplace and continue to grow its
              presence in the pharmaceutical industry.

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                  d.       Government's projected revenue is expected to decline
                        approximately $34 million due to the completion of
                         the construction phase at the project at Pine Bluff
                        and the final completion of the projects at Weldon
Spring and RMRS.          

Total gross profit is expected to increase by approximately $18 million from    
fiscal 2001 to 2002.                                                            

          a.       Power's projected gross profit is expected to
                   increase approximately $18 million due to the
                        implementation of certain overhead cost reductions
                          and the booking of more profitable work now once all
                        negative cash flow projects are either reformed or
rejected.                 

                  b.       Infrastructure and Mining's projected gross profit is
                       expected to increase $9 million due to run off of
                       profitable projects in the pipeline, specifically
                       E-470, the beginning of work on the profitable NW
                         Parkway project and the completion of projects with
                        losses during fiscal 2001 (which had a significant
                         adverse affect on the gross profit in fiscal 2001).

                c.       I/Ps projected gross profit is expected to increase
             by approximately $27 million due to the
                           implementation of certain overhead cost reductions, a
                          reduction in the unabsorbed labor due to an increase
                    in the chargeability of engineering resources.

                 d.       The Company booked a management adjustment to reduce
                    gross profit by $25 million (see assumptions).

                Billings in excess of cost was reduced by approximately $204
million from fiscal 2001 to 2002 due to the run off of Burlington Train 3, San  
Roque and Hudson Bergen, all of which had previously received large up front    
payments from the customer. The Projections do not assume that there are any    
projects that have large up front payments going forward.                       

2.       PRINCIPAL ASSUMPTIONS UNDERLYING THE PROJECTIONS     

           a.       Although the Debtors anticipate emergence from
                    Chapter 11 in September, 2001, there can be no
              assurance at this time that this will be
                          accomplished. Accordingly, the Projections portray a
                           financial condition and the results of operations and
                           cash flows assuming that the Debtors will emerge from
                          Chapter 11 on December 1, 2001 (the first day of the
                   Company's 2002 fiscal year). Washington Group
                          International, B.V. (formerly Raytheon Engineers and
                         Constructors B.V.) is part of a separate bankruptcy
                      filing in the Netherlands and will be liquidated
during 2001.              

               b.       The Projections assume that the Exit Facility will
               consist of a revolving credit facility of
                         approximately $350 million (the "Revolver") to fund
                    working capital, letters of credit and general
                          corporate purposes. As noted above, the Debtors have
                         not obtained a commitment for an Exit Facility, and
                         believe that the Plan will be feasible if a smaller
                           Exit Facility is ultimately obtained. The term of the
                           Revolver is assumed to be 3 years. The initial use of
                         the Revolver will be to repay any funded debt under
                           the DIP Facility and to replace any letters of credit
                      issued under the DIP Facility or the Prepetition
                     Credit Facility that remain outstanding. Funded
                         borrowings under the revolver peak at approximately
                          $100 million during fiscal year 2002. It is expected
                          that there will bo no other debt outstanding outside
of the Exit Facility.     

                 c.       Bonding capacity will be made available and new work
                     will not be constrained by any capacity issues.
                    Future bonds will not require letter of credit
                        support. The letter of credit collateral issued to
                          the sureties during the period of bankruptcy will be
                           released on the Effective Date. The amount of bonding
                          available is expected to be inversely related to the
                       amount of leverage. To the extent actual leverage
                     exceeds the projected amounts, bonding, and the
                          bonding dependent revenues and profit may be reduced
        (such reductions may be material).

           d.       Historically, MK (before the RE&C acquisition)
                          carried positive working capital of approximately 5%
                       of annual revenues. The large power projects from
                    RE&C, with the large advance payments, created
                     negative working capital. In the long term, WGI
                           management believes that Reorganized WGI will require
                       positive working capital. The Projections reflect
                          this shift from negative working capital to positive
                      working capital. The working capital increase is
                          expected to be funded with cash flow from operations
and the Revolver.         

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                  e.       Fresh start accounting adjustments in accordance with
                     SOP 90-7 are included in the Business Plan. The
                       preliminary enterprise value was assumed when the
                       Projections were prepared to be $550 million. See
                        SECTION XI.E for a summary of the final valuation.
                         $50 million has been allocated to debt arising from
                     repaying the projected borrowings under the DIP
                        Facility and to fund the WGI Creditor Trust on the
                Effective Date and $500 million to equity.
                           Outstanding borrowings and accrued interest under the
                           Prepetition Credit Agreement will be discharged under
                     the Plan, and holders of such debt will receive
                        equity in Reorganized WGI. All claims that WGI has
                     against Raytheon will be transferred to the WGI
                         Creditor Trust, and WGI will contribute $20 million
                       to the WGI Creditor Trust to fund litigation. The
                         goodwill on the balance sheet of approximately $523
                          million, which is part of the fresh start accounting
                           and is based on the Valuation, will not be amortized,
                     consistent with the recently proposed change in
accounting by the FASB.   

                 f.       The effective tax rate is estimated to be 40.0%. The
                           cash taxes paid will be significantly less due to the
                         continued amortization of goodwill ($65 million/yr)
                           for tax purposes. This will result in the deferral of
                       85%, 60% and 50% of taxes in 2002, 2003 and 2004.

            g.       The Petroleum and Chemicals Group will sell the
                      Technology Center before year-end 2001 and leave
                           Washington Group International, B.V. in receivership.
                         The remainder of the Petroleum and Chemicals Group,
                         which consists of the gas process business, will be
                    combined with I/P. This combination results in
        significant overhead cost savings.

         h.       The Estimated Operating Cash Flows have been
                       developed on a project-by-project basis for major
                           projects and estimated, by group and division, in the
     aggregate for smaller projects.

               i.       In addition to the cost reductions included in the
                           Projections, the Company will make further reductions
                         overhead and office locations in 2001 and 2002. The
                     Company will incur significant costs, including
                         employee severance and relocation costs, related to
                        these cost reductions. These costs, as well as the
                     associated benefit, have not been measured, and
                  consequently, have not been reflected in the
Projections.              

            j.       During the Chapter 11 Cases, WGI is expected to
                         reform or reject the following 3 projects: Red Oak,
                          Ilijan and EELV. Performance on the Sithe Mystic and
                          Fore River projects was terminated prepetition. As a
                   result, ongoing negative cash flow from these
projects is not projected.

                 k.       Burlington Resources (Burlington Train 3 project) is
             expected to continue to pay vendors and
                    subcontractors directly until October 1, 2001.
                           Thereafter, WGI will work under the original contract
                           to complete the project. The Train 3 project received
                           large advance payments in prior periods. Beyond 2001,
              the contract has a negative cash flow of
                         approximately of $45 to $50 million. The reasons to
 continue this contract are:

                     (i)      Similar projects are very important to
                                 future growth potential from existing and
                                  new client, including Burlington Resources
        and Exxon/Mobil.

                   (ii)     As this is not a Raytheon guaranteed
                                project, the adverse consequences to the
                                  Company's other businesses could be severe
                       if this contract were rejected.

               l.       The sale of the Electro Mechanical Division of the
                         Westinghouse Group is assumed to occur in the first
                          quarter of 2002 for $50 million of which $30 million
 (60%) would be paid to WGI.

                  m.       Capital expenditures are expected to be approximately
                           $43.2 million in 2002. These capital expenditures are
                  made up of approximately $33 million for the
                     Infrastructure and Mining Group ($10 million to
                         maintain the existing fleet and $23 million for new
                         projects), approximately $6.0 million for the other
                  groups and approximately $4.0 million at the
corporate level.          

             n.       Management has made an adjustment to reduce 2002
                      gross profit by $25 million. This is an order of
                   magnitude adjustment to take into account the
                         potential impact of several risks that exist in the
                      transition period as the Debtors emerge from the
                Chapter 11 Cases and return to more normal
     operations. Such risks include:

                       (i)      Although the Debtors currently expect to
                                emerge from bankruptcy during its fiscal
           2001 (in September,

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                                  2001), events could occur that might delay
                                   confirmation of the Plan or their emergence
                          from bankruptcy. Such delays could
                                  negatively impact the Company's successful
                               acquisition of new contracts and extend
                           bankruptcy related costs into 2002.

                   (ii)     While management has included in the
                                  Projections its best estimate of new work,
                               it is possible that new work may not be
                            obtained, or "ramp-up" as quickly as
                                    estimated and/or that the cost to obtain new
                                 work (sales and bid & proposal costs) may
                                  exceed estimates. Either possibility would
                               negatively impact gross profit in 2002.

                           (iii)    In preparing the Projections, management has
                                   developed its best estimate of the costs of
                                  operating the business after the Effective
                                    Date. However, there may be unforeseen costs
                               that arise during the initial period of
                               operations that would negatively impact
          financial results.

                     (iv)     Management has undertaken a program to
                       reduce overhead and general and
                                   administrative costs across the Company. It
                               is possible that cost reduction efforts
                                 anticipated by the Projections may not be
                       achieved as quickly as planned.

                    (v)      On Friday, June 22, 2001, the Defense
                                    Contract Audit Agency (DCAA) issued an audit
                         report on the Company's financial
                                  suitability as a government contractor, in
                             which it concluded that "WGI is in an
                                  adverse financial condition" and "may have
                                  difficulty meeting its near term financial
                                   obligations and may be unable to perform on
                                  government contracts without extraordinary
                                 management actions". The Company rebutted
                                    DCAA's opinion and the rebuttal was included
                                   as an appendix to the audit report. DCAA is
                             obliged to update their report as the
                              bankruptcy process proceeds and as the
                                  Debtors emerge from bankruptcy. Management
                                  expects Government's ability to obtain new
                                   work to be impacted by DCAA's audit report.
                            Should the DCAA not provide a timely
                             revision to their audit report as the
                                    Debtors emerge from bankruptcy, Government's
                              operations may be negatively impacted.

                        (vi)     Management's evaluation of the I/P market
                              indicates some current softness and an
                                expectation of continued softness in the
                                   near future. While management has developed
                                    its best estimate of new work for I/P, it is
                                  possible that such new work levels may not
                                  be attained, which would negatively impact
          financial results.

                     (vii)    The Company's projected balance sheets
                             indicate that at the end of 2002, the
                                 Company will have negligible tangible net
                                    worth. Tangible net worth is a key factor in
                                   the evaluation of bond worthiness by surety
                                    companies. Because the tangible net worth is
                                   negligible, it is possible that the Company
                               may not be able to obtain all the bonds
                                  anticipated by the Projections or that the
                            premiums charged may be greater than
  projected.

            o.       The Projections include an increase in accounts
                         receivable of $40 million in each of 2003 and 2004,
                          which is reflected in corporate accounts receivable.
                        These increases are to reflect Management's belief
                           that overtime and working capital (exclusive of cash)
                          will be approximately equal to 5% of revenues. While
                    the actual increases will occur in the various
                     components of each groups' working capital, for
                       convenience of presentation, these estimates have
                         been reflected only in accounts receivable and have
                    not been pushed down to the respective groups.

 VI. SUMMARY OF THE PLAN OF REORGANIZATION

     THIS SECTION PROVIDES A SUMMARY OF THE STRUCTURE,
CLASSIFICATION, TREATMENT AND IMPLEMENTATION OF THE PLAN AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE PLAN, WHICH ACCOMPANIES THIS DISCLOSURE STATEMENT, 
AND TO THE EXHIBITS ATTACHED THERETO.                                           

              THE PLAN ITSELF AND THE DOCUMENTS REFERRED TO THEREIN WILL
CONTROL THE TREATMENT OF CREDITORS AND EQUITY SECURITY HOLDERS UNDER THE PLAN   
AND WILL, UPON THE EFFECTIVE DATE, BE BINDING UPON HOLDERS OF CLAIMS AGAINST, OR
INTERESTS IN, THE DEBTORS, THE REORGANIZED DEBTORS AND OTHER PARTIES IN         
INTEREST.                                                                       

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A.       OVERALL STRUCTURE OF THE PLAN                                          

                  Chapter 11 is the principal business reorganization chapter of
the Bankruptcy Code. Under Chapter 11, a debtor is authorized to reorganize its 
business for the benefit of its creditors and shareholders. Upon the filing of a
petition for relief under Chapter 11, section 362 of the Bankruptcy Code        
provides for an automatic stay of substantially all acts and proceedings against
the debtor and its property, including all attempts to collect claims or enforce
liens that arose prior to the commencement of the Chapter 11 case.              

                 The consummation of a plan of reorganization is the principal
objective of a Chapter 11 case. A plan of reorganization sets forth the means   
for satisfying claims against and interests in a debtor. Confirmation of a plan 
of reorganization by the Bankruptcy Court makes the plan binding upon the       
debtor, any issuer of securities under the plan, any person or entity acquiring 
property under the plan, and any creditor of or equity security holder in the   
debtor, whether or not such creditor or equity security holder (i) is impaired  
under or has accepted the plan or (ii) receives or retains any property under   
the plan. Subject to certain limited exceptions and other than as provided in   
the plan itself or the confirmation order, the confirmation order discharges the
debtor from any debt that arose prior to the date of confirmation of the plan   
and substitutes therefor the obligations specified under the confirmed plan, and
terminates all rights and interests of equity security holders.                 

                 The terms of the Plan are based upon, among other things, the
Debtors' assessment of their ability to achieve the goals of their Business     
Plan, make the distributions contemplated under the Plan and pay certain of     
their continuing obligations in the ordinary course of the Reorganized Debtors' 
businesses as approved by the Bankruptcy Court. Under the Plan, Claims against, 
and Interests in, the Debtors are divided into Classes according to their       
relative seniority and other criteria.                                          

        If the Plan is confirmed by the Bankruptcy Court and
consummated, (i) the Claims in certain Classes will be reinstated or modified   
and receive distributions equal to the full amount of such Claims, and (ii) the 
Claims in other Classes will be modified and receive distributions constituting 
a partial recovery on such Claims. On the Effective Date and at certain times   
thereafter, the Reorganized Debtors will distribute Cash, securities and other  
property in respect of certain Classes of Claims as provided in the Plan. The   
Classes of Claims against the Debtors created under the Plan, the treatment of  
those Classes under the Plan and the securities and other property to be        
distributed under the Plan are described below.                                 

B.       SUBSTANTIVE CONSOLIDATION FOR PURPOSES OF TREATING IMPAIRED CLAIMS     

                  The Plan is premised upon the substantive consolidation of the
Debtors only with respect to the treatment of Class 6 and 7 Claims under the    
Plan, for voting, confirmation and distribution purposes. The Plan does not     
contemplate the substantive consolidation of the Debtors with respect to other  
Classes of Claims or Interests set forth in the Plan. Substantive consolidation 
under the Plan will not effect a transfer or commingling of any assets of any   
Debtors, and all assets (whether tangible or intangible) will continue to be    
owned by the respective Debtors.                                                

          Generally, substantive consolidation of the estates of
multiple debtors in a bankruptcy case effectively combines the assets and       
liabilities of the multiple debtors for certain purposes under a plan. The      
effect of consolidation is the pooling the assets of, and claims against, the   
consolidated debtors; satisfying liabilities from a common fund; and combining  
the creditors of the debtors for purposes of voting on reorganization plans.    
There is no statutory authority specifically authorizing substantive            
consolidation. The authority of a bankruptcy court to order substantive         
consolidation is derived from its general equitable powers under section 105(a) 
of the Bankruptcy Code, which provides that the court may issue orders necessary
to carry out the provisions of the Bankruptcy Code. Nor are there statutorily   
prescribed standards for substantive consolidation. Instead, judicially         
developed standards control whether substantive consolidation should be granted 
in any given case.                                                              

                The propriety of substantive consolidation must be evaluated
on a case-by-case basis. The extensive list of elements and factors frequently  
cited and relied upon by courts in determining the propriety of substantive     
consolidation are may be viewed as variants on two critical factors, namely, (i)
whether creditors dealt with the entities as a single economic unit and did not 
rely on their separate identity in extending credit or (ii) whether the affairs 
of the debtors are so entangled that consolidation will benefit all creditors.  
Some courts have viewed those elements and factors as examples of information   
that may be useful to courts charged with deciding whether there is substantial 
identity between the entities to be consolidated and whether consolidation is   
necessary to avoid some harm or to realize some benefit.                        

             Among the factors or elements looked to by courts are the
following:                                                                      

        o        the degree of difficulty in segregating and
                           ascertaining the individual assets and liabilities of
the entities to be        

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consolidated;             

              o        the presence or absence of consolidated financial
                       statements among the entities to be consolidated;

             o        the commingling of assets and business functions
            among the entities to be consolidated;

           o        the unity of interests and ownership among the
various entities;         

                  o        the existence of parent and intercorporate guarantees
           on loans to the various entities; and

           o        the transfer of assets to and from the various
                     entities without formal observance of corporate
formalities.              

          The facts and circumstances surrounding the historical
business operations of the WGI and the Subsidiary Debtors support substantive   
consolidation in these Chapter 11 Cases for the limited purposes of voting,     
confirmation and distributions to Classes 6 and 7. Creditors generally view the 
Company as a single economic unit, except for joint ventures and the            
Westinghouse Group, which are not Debtors in these cases. Importantly, all      
obligations to the Prepetition Secured Lenders and the holders of Old Notes are 
guaranteed by identical subsidiaries, which are the principal operating Debtor  
subsidiaries of the Company. WGI and the Subsidiary Debtors historically have   
issued consolidated financial statements and filed consolidated tax returns. WGI
and its Subsidiary Debtors have common officers and directors, and have shared  
key employees and outside professionals, including, but not limited to,         
employees of WGI who perform human resources, legal, and risk management        
services for the benefit of all the Debtors and accounting firms, law firms,    
engineers and consultants who rendered services to all of the Debtors. In       
addition, the Debtors' cash management system is highly centralized. As an      
outgrowth of this consolidated cash management system, intercompany loans       
routinely are made by and between WGI and the Subsidiary Debtors (and by and    
between the Subsidiary Debtors themselves) in the ordinary course of the        
Debtors' business. Accordingly, the Debtors believe that substantive            
consolidation for limited purposes of voting, confirmation and distributions to 
Classes 6 and 7 is warranted in light of the criteria established by the courts 
in ruling on the propriety of substantive consolidation in other cases.         

         Certain parties have stated that they may oppose, and
Mitsubishi has stated that it will oppose, the substantive consolidation        
proposed under the Plan on the grounds that they believe that certain creditors 
may be adversely affected by such substantive consolidation including creditors 
that hold a claim against a single Debtor or that substantive consolidation is  
improper under the circumstances. These situations may be fact specific. The    
Debtors do not believe that the substantive consolidation proposed in the Plan  
will negatively impact creditor recoveries. The Bankruptcy Court will hear any  
objections to the substantive consolidation proposed in the Plan at the         
Confirmation Hearing. Therefore, any creditor who opposes the substantive       
consolidation proposed under the Plan must file an objection to the Plan or     
enter into an agreement with the Debtors reserving their right prior to the     
Confirmation Hearing. See SECTION II.E for instructions as to how to file an    
objection to the Plan. As part of their monthly operating reports, which are    
available on the Court's website, the Debtors file certain balance sheet        
information for individual Debtors.                                             

         Additionally, certain creditors have asserted that if
substantive consolidation of the Debtors as proposed under the Plan occurs,     
there would be no need for classification of Class 4 Claims. The Debtors dispute
this assertion.                                                                 

C.       CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS                   

               Section 1122 of the Bankruptcy Code provides that a plan of
reorganization must classify the claims and interests of a debtor's creditors   
and equity interest holders. In accordance with section 1122, the Plan divides  
Claims and Interests into Classes and sets forth the treatment for each Class   
(other than DIP Facility Claims, Administrative Claims and Priority Tax Claims  
which, pursuant to section 1123(a)(1), do not need to be classified). The       
Debtors also are required, under section 1122 of the Bankruptcy Code, to        
classify Claims against and Interests in the Debtors into Classes that contain  
Claims and Interests that are substantially similar to the other Claims and     
Interests in such Class.                                                        

                  Under the Plan, unsecured Claims are placed into two classes -
Class 3 and Class 7. Claims in Class 7 are General Unsecured Claims, excluding  
only Unimpaired Unsecured Claims, and include, without limitation, the Old Note 
Claims, the Raytheon Asserted Claims (if any) and the Lender Deficiency Claims. 
Class 7 Claims are designated as Impaired. Claims in Class 3 are comprised of   
Employee Claims, which are defined as unsecured Claims of any person employed by
any of the Debtors on the Petition Date other than Claims arising as a result of
the assumption of any contract or agreement or the rejection of any contract or 
agreement on Schedule 6.3 of the Plan, or that are tort claims.. Class 3 Claims 
are designated as Unimpaired. The Debtors believe that separate classification  
and treatment of the Employee Claims is appropriate because employees are the   
principal asset of the Debtors. Maintenance of normal employee relations and    
morale is critical to the Debtors' reorganization efforts and long-term value.  

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               The Debtors believe that the Plan has classified all Claims
and Interests in compliance with the provisions of section 1122 and applicable  
case law, but it is possible that a holder of a Claim or Interest may challenge 
the Debtors' classification of Claims and Interests and that the Bankruptcy     
Court may find that a different classification is required for the Plan to be   
confirmed. In that event, the Debtors intend, to the extent permitted by the    
Bankruptcy Code, the Plan and the Bankruptcy Court, to make such reasonable     
modifications of the classifications under the Plan to permit confirmation and  
to use the Plan acceptances received in this Solicitation for purposes of       
obtaining the approval of the reconstituted Class or Classes of which each      
accepting holder ultimately is deemed to be a member. Any such reclassification 
could adversely affect the Class in which such holder initially was a member, or
any other Class under the Plan, by changing the composition of such Class and   
the vote required of that Class for approval of the Plan.                       

                  The amount of any Impaired Claim that ultimately is allowed by
the Bankruptcy Court may vary from any estimated allowed amount of such Claim   
and accordingly the total Claims ultimately allowed by the Bankruptcy Court with
respect to each Impaired Class of Claims may also vary from any estimates       
contained herein with respect to the aggregate Claims in any Impaired Class.    
Thus, the value of the property that ultimately will be received by a particular
holder of an Allowed Claim under the Plan may be adversely or favorably affected
by the aggregate amount of Claims ultimately allowed in the applicable Class.   

                The classification of Claims and Interests and the nature of
distributions to members of each Class are summarized below. The Debtors believe
that the consideration, if any, provided under the Plan to holders of Claims and
Interests reflects an appropriate resolution of their Claims and Interests,     
taking into account the differing nature and priority (including applicable     
contractual and statutory subordination) of such Claims and Interests and the   
fair value of the Debtors' assets. In view of the deemed rejection by Class 8,  
however, as set forth below, the Debtors will seek confirmation of the Plan     
pursuant to the "cramdown" provisions of the Bankruptcy Code. Specifically,     
section 1129(b) of the Bankruptcy Code permits confirmation of a Chapter 11 plan
in certain circumstances even if the plan has not been accepted by all impaired 
classes of claims and interests. SEE SECTION VI.N.2. Although the Debtors       
believe that the Plan can be confirmed under section 1129(b), there can be no   
assurance that the Bankruptcy Court will find that the requirements to do so    
have been satisfied.                                                            

1.       TREATMENT OF UNCLASSIFIED CLAIMS UNDER THE PLAN      

a.       DIP FACILITY CLAIMS                

                  DIP Facility Claims are Claims arising under or as a result of
the DIP Facility. On the Effective Date, each holder of an Allowed DIP Facility 
Claim shall receive in full satisfaction, settlement, release, and discharge of 
and in exchange for such Allowed DIP Facility Claim (i) Cash equal to the unpaid
portion of such Allowed DIP Facility Claim or (ii) such other treatment as to   
which WGI and such holder shall have agreed upon in writing.                    

b.       ADMINISTRATIVE CLAIMS              

                  The Plan provides that for Administrative Claims to be paid in
full. Administrative Claims consist of the actual and necessary costs and       
expenses of the Chapter 11 Cases that are allowed under sections 503(b) and     
507(a)(1) of the Bankruptcy Code. They include, among other things, the cost of 
operating the Debtors' businesses following the Petition Date (E.G., the        
post-petition salaries and other benefits for the Debtors' employees which the  
Debtors have obtained an order allowing them to pay in the ordinary course of   
business, post-petition rent, amounts owed to vendors providing goods and       
services to the Debtors during the Chapter 11 Cases, tax obligations incurred   
after the Petition Date, certain statutory fees and charges assessed under 28   
U.S.C. Section 1930) and the actual, reasonable fees and expenses of the        
professionals retained by the Debtors and the Creditors' Committee. All payments
to professionals in connection with the Chapter 11 Cases for compensation and   
reimbursement of expenses and all payments to reimburse expenses of members of  
the Creditors' Committee will be made in accordance with the procedures         
established by the Bankruptcy Code and the Bankruptcy Rules and will be subject 
to approval of the Bankruptcy Court as being reasonable.                        
              The estimated amount of non-ordinary course Administrative
Claims to be incurred during the Chapter 11 Cases (which are primarily comprised
of professional fees and which will be paid, in part, during the Chapter 11     
Cases pursuant to Bankruptcy Court orders), is approximately $20 million.       

      Except as otherwise provided in and subject to the
requirements of the Plan, the Plan provides that on or as soon as reasonably    
practicable after the latest of (i) the Distribution Date, (ii) the date an     
Administrative Claim becomes an Allowed Administrative Claim, or (iii) the date 
an Administrative Claim becomes payable pursuant to any agreement between a     
Debtor and the holder of such Administrative Claim, each holder of an Allowed   
Administrative Claim will receive in full satisfaction, settlement, release and 
discharge of and in exchange for such Allowed Administrative Claim (x) Cash     
equal to the unpaid portion of such Allowed Administrative Claim or (y) such    
other treatment as to which the applicable Debtor and such holder shall have    
agreed upon in writing; PROVIDED, HOWEVER, that Allowed                         

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Administrative Claims with respect to liabilities incurred by a Debtor in the   
ordinary course of business during the Chapter 11 Cases will be paid in the     
ordinary course of business in accordance with the terms and conditions of any  
agreements relating thereto.                                                    

                  Holders of Administrative Claims based on liabilities incurred
by the Debtors in the ordinary course of their businesses will not be required  
to file or serve any request for payment of such Claims, as these liabilities   
will be assumed by the applicable Reorganized Debtor and paid, performed or     
settled when due in accordance with the terms and conditions of the particular  
agreements governing such obligations.                                          

c.       PRIORITY TAX CLAIMS                

                Priority Tax Claims are Unsecured Claims asserted by federal
and state governmental authorities for taxes specified in section 507(a)(8) of  
the Bankruptcy Code, such as certain income taxes, property taxes, excise taxes,
and employment and withholding taxes. These Unsecured Claims are given a        
statutory priority in right of payment.                                         

            Under the Plan, except to the extent that a holder of an
Allowed Priority Tax Claim has been paid by the Debtors prior to the            
Distribution Date or has agreed in writing to a different treatment, each holder
of an Allowed Priority Tax Claim will be paid, at the sole discretion of the    
Debtors, (i) equal Cash payments made on the last Business Day of every         
three-month period following the Effective Date, over a period not exceeding six
years after the assessment of the tax on which such Claim is based, totaling the
principal amount of such Claim plus simple interest on any outstanding balance  
from the Effective Date calculated at the interest rate available on ninety (90)
day United States Treasuries on the Effective Date, or (ii) such other treatment
as to which a Debtor and such holder shall have agreed upon in writing.         

               The Debtors estimate that aggregate Priority Tax Claims are
approximately $18 to $20 million.                                               

      2.       TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS UNDER THE PLAN

a.       UNIMPAIRED CLASSES OF CLAIMS       

            (i)     CLASS 1 -OTHER PRIORITY CLAIMS

                Class 1 consists of all Claims entitled to priority pursuant
to section 507(a) of the Bankruptcy Code other than DIP Facility Claims,        
Priority Tax Claims or Administrative Claims.                                   

            Under the Plan, on, or as soon as reasonably practicable
after, the latest of (i) the Distribution Date, (ii) the date such Class 1 Claim
becomes an Allowed Class 1 Claim, or (iii) the date such Class 1 Claim becomes  
payable pursuant to any agreement between a Debtor and the holder of such Class 
1 Claim, each holder of an Allowed Class 1 Claim will receive in full           
satisfaction, settlement, release and discharge of and in exchange for such     
Allowed Class 1 Claim (x) Cash equal to the unpaid portion of such Allowed Class
1 Claim or (y) such other treatment as to which a Debtor and such holder shall  
have agreed upon in writing. Class 1 Claims are Unimpaired and therefore not    
entitled to vote on the Plan.                                                   

            (ii)     CLASS 2 -OTHER SECURED CLAIMS

              Class 2 consists of separate subclasses of claims that are
secured by a Lien upon property in which the Estate has an interest, to the     
extent of the value of the Claim holders' interest in the Estate's interest in  
such property, as determined pursuant to section 506(a) of the Bankruptcy Code  
against the Debtors other than the Secured Lender Claims included in Class 6    
below ("Other Secured Claims"). Each subclass is deemed to be a separate Class  
for all purposes under the Bankruptcy Code.                                     

               On the Effective Date, the legal, equitable and contractual
rights of holders of an Allowed Class 2 Claim shall be Reinstated, subject to   
the provisions of ARTICLE VII of the Plan. The Debtors' failure to object to any
such Class 2 Claims in the Chapter 11 Cases shall be without prejudice to the   
rights of WGI or the Reorganized Debtors to contest or otherwise defend against 
such Claim in the appropriate forum when and if such Claim is sought to be      
enforced by the Other Secured Claim holder. Notwithstanding section 1141(c) or  
any other provision of the Bankruptcy Code, all pre-petition liens on property  
of any Debtor held by or on behalf of the Other Secured Claim holders with      
respect to such Claims shall survive the Effective Date and continue in         
accordance with the contractual terms of the underlying agreements with such    
Claim holders until, as to each such Claim holder, the Allowed Claims of such   
Other Secured Claim holder are paid in full, subject to the provisions of       
ARTICLE VII of the Plan.                                                        

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               Class 2 Claims are Unimpaired and therefore not entitled to
vote on the Plan.                                                               

                    (iii)     CLASS 3 -UNIMPAIRED UNSECURED CLAIMS

Class 3 consists of Employee Claims.        

                 Under the Plan, each holder of an Allowed Class 3 Claim shall
have its Claim Reinstated. Class 3 Claims are Unimpaired and therefore not      
entitled to vote on the Plan.                                                   

         (iv)   CLASS 4 -INTERCOMPANY CLAIMS

               Class 4 consists of, as the case may be, any Claim (a) by a
Debtor against another Debtor or (b) by a Non-Debtor Subsidiary against a       
Debtor.                                                                         

                 Under the Plan and except as is provided therein, each holder
of an Allowed Class 4 Claim shall have its Claim Reinstated. Class 4 Claims are 
Unimpaired and therefore not entitled to vote on the Plan.                      

            (v)      CLASS 5 -SUBSIDIARY INTERESTS

                  Class 5 consists of the issued and outstanding shares of stock
the subsidiaries directly or indirectly owned by WGI, as of the Petition Date.  
Under the Plan, subject to the Restructuring Transactions, if any, all Class 5  
Interests will be Reinstated. Class 5 Interests are Unimpaired and therefore not
entitled to vote on the Plan.                                                   

b.       IMPAIRED CLAIMS AND INTERESTS      

            (i)     CLASS 6 -SECURED LENDER CLAIMS

                 Class 6 consists of all Secured Claims of Prepetition Secured
Lenders arising under or as a result of the Prepetition Senior Secured Credit   
Facility, which Claims will be deemed Allowed pursuant to the Plan in the       
approximate amount of $505 million, adjusted downward (if necessary) by the     
Confirmation Hearing as a result of the issuance of the Washington Stock        
Options.                                                                        

        Under the Plan, on the Effective Date, each holder of an Allowed Class
6 Claim, in full satisfaction, settlement, release, and discharge of and in     
exchange for such Allowed Class 6 Claim, will receive on or as soon as          
practicable after the Distribution Date, its Pro Rata share one-hundred percent 
(100%) of the New Common Shares issued and outstanding as of the Effective Date 
subject to Dilution. Class 6 Claims are Impaired and entitled to vote on the    
Plan.                                                                           

                 (ii)     CLASS 7 - GENERAL UNSECURED CLAIMS

               Claims in Class 7 are those Claims against the Debtors that
are not DIP Facility Claims, Administrative Claims, Priority Tax Claims, Other  
Priority Claims, Other Secured Claims, Intercompany Claims, Secured Lender      
Claims or Unimpaired Unsecured Claims, and include, without limitation, the Old 
Note Claims, the Raytheon Asserted Claims (if any) and the Lender Deficiency    
Claims (which claims are deemed Allowed pursuant to the Plan in an amount to be 
established by the Confirmation Hearing). Lender Deficiency Claims will be      
established based primarily upon the amount of funded debt owed to the          
Prepetition Secured Lenders MINUS the amount of the Secured Lender Claims.      
Currently, there are approximately $130 million in undrawn letters of credit    
under the Prepetition Senior Secured Credit Facility. Significant draws upon the
undrawn letters of credit under the Prepetition Senior Secured Credit Facility  
prior to the Confirmation Hearing are not anticipated, but if they were to      
occur, would increase the amount of the Lender Deficiency Claims on a dollar for
dollar basis.                                                                   

            Under the Plan, on the Effective Date, each holder of an
Allowed Class 7 Claim shall be deemed to receive, in full satisfaction,         
settlement, release and discharge of and in exchange for such Allowed Class 7   
Claim, a pro rata beneficial interest in the WGI Creditor Trust, and shall be   
entitled to receive pro rata distributions from the WGI Creditor Trust pursuant 
to the terms and conditions set forth in SECTION 9.7 of the Plan and the WGI    
Creditor Trust Agreement until such Claim is paid in full with interest accruing
from the Petition Date, at a rate of 20% per annum, compounded quarterly. Class 
7 Claims are Impaired and entitled to vote on the Plan.                         

                        (iii)     CLASS 8 - WGI INTERESTS AND SUBORDINATED
CLAIMS

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       Class 8 consists of all WGI Interests and any Claim
subordinated pursuant to sections 510(b) or (c) of the Bankruptcy Code. Under   
the Plan, the holders of WGI Interests and Subordinated Claims shall not receive
or retain any property under the Plan on account of such Interests or Claims,   
other than the WGI Creditor Trust Equity Residual, if any. The WGI Creditor     
Trust Equity Residual consists of any Net Trust Recovery remaining after payment
in full of each Allowed General Unsecured Claim plus interest accruing from the 
Petition Date, at a rate of 20% per annum, compounded quarterly. On the         
Effective Date, all of the WGI Interests shall be deemed cancelled and          
extinguished. Class 8 Claims and Interests are Impaired and are presumed to     
receive no distribution under the Plan and are therefore deemed to reject the   
Plan and are not entitled to vote on the Plan.                                  

3.       RESERVATION OF RIGHTS REGARDING CLAIMS               

                Except as otherwise explicitly provided in the Plan, nothing
shall affect the Debtors' or Reorganized Debtors' rights and defenses, both     
legal and equitable, with respect to any Claims, including, but not limited to, 
all rights with respect to legal and equitable defenses to alleged rights of    
setoff or recoupment. Notwithstanding the substantive consolidation of the      
Debtors, the Claims of any particular Debtor that are Unimpaired shall remain   
the obligations solely of such Debtor and shall not become obligations of any   
other Debtor or Reorganized Debtor.                                             

4.       RAYTHEON ASSERTED CLAIMS                             

             Raytheon has indicated that it believes that it has valid
claims against the Debtors. SEE APPENDIX D. The Debtors believe that, among     
other things, as a result of the Debtors claims against Raytheon, Raytheon is a 
debtor to the Debtors, not a creditor. Moreover, the Debtors dispute that       
Raytheon has any Claims that can or should be allowed, including, without       
limitation, by operation of section 502(d) of the Bankruptcy Code. In addition, 
notwithstanding anything in the Plan to the contrary, it is the Debtors'        
intention to commence an action and to seek an order of the Bankruptcy Court to 
object to and, if necessary, to seek to equitably subordinate all Raytheon      
Asserted Claims pursuant to section 510(c) of the Bankruptcy Code or otherwise. 
In the event such subordination is successful, any Raytheon Asserted Claims that
would otherwise be Allowed will be classified in Class 8. SEE SECTION VI.C.4.   

D.       DISTRIBUTIONS UNDER THE PLAN                                           

                  Except as set forth in the succeeding sentence, the Disbursing
Agent shall make all distributions required under this Plan. Distributions      
provided for in the Plan on account of Allowed Class 7 Claims shall be made by  
the Trustee. The WGI Creditor Trust Agreement shall provide that any            
distributions to be made on account of Allowed Old Note Claims shall be made to 
the Indenture Trustee, as Disbursing Agent for Old Note Claims, for further     
distribution to holders of Allowed Old Note Claims.                             

         If the Disbursing Agent is an independent third party
designated by the Reorganized Debtors to serve in such capacity, such Disbursing
Agent shall receive, without further Bankruptcy Court approval, reasonable      
compensation for distribution services rendered pursuant to the Plan and        
reimbursement of reasonable out-of-pocket expenses incurred in connection with  
such services from the Reorganized Debtors on terms acceptable to the           
Reorganized Debtors. No Disbursing Agent shall be required to give any bond or  
surety or other security for the performance of its duties unless otherwise     
ordered by the Bankruptcy Court.                                                

                 Cash payments made pursuant to the Plan will be in U.S. funds
by means agreed to by the payor and the payee, including by check or wire       
transfer, or, in the absence of an agreement, such commercially reasonable      
manner as the payor shall determine in its sole discretion.                     

           Except as otherwise provided in the Plan, any ancillary
documents entered into in connection therewith, or the Confirmation Order, the  
Debtors shall have the right to prepay, without penalty, all or any portion of  
an Allowed Claim at any time; PROVIDED, HOWEVER, that any such prepayment shall 
not violate, or otherwise prejudice, the relative priorities among the classes  
of Claims. On the Effective Date, Reorganized WGI shall issue or distribute in  
accordance with the provisions of the Plan all of the New Common Shares         

    1.       DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE

a.       DISTRIBUTION DATE                  

            Except as otherwise provided herein or as ordered by the
Bankruptcy Court, distributions to be made on account of Claims that are Allowed
Claims as of the Effective Date shall be made as soon as practicable after the  
Effective Date. Distributions on account of Claims that first become Allowed    
Claims after the Effective Date shall be made pursuant to ARTICLE VII of the    
Plan.                                                                           

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Notwithstanding the date on which any distribution of securities is actually    
made to a holder of a Claim or Interest that is an Allowed Claim or Allowed     
Interest on the Effective Date, as of the date of the distribution such holder  
shall be deemed to have the rights of a holder of such securities distributed as
of the Effective Date.                                                          

                b.       RECORD DATE FOR DISTRIBUTIONS TO HOLDERS OF SECURED
 LENDER CLAIMS AND OLD NOTES

       Under the Plan, the Distribution Record Date is the
Confirmation Date, unless determined to be otherwise in the Confirmation Order. 
At the close of business on the Distribution Record Date, the transfer records  
for the Secured Lender Claims and Old Note holder claims shall be closed, and   
there shall be no further changes in the record holders of Secured Lender Claims
or Old Notes. None of Reorganized WGI, the Disbursing Agent, if any, the        
Trustee, nor the Administrative Agent for the Prepetition Secured Lenders shall 
have any obligation to recognize any transfer of such Secured Lender Claims or  
Old Note holder claims occurring after the Distribution Record Date and shall be
entitled instead to recognize and deal for all purposes hereunder with only     
those record holders as of the close of business on the Distribution Record     
Date.                                                                           

              c.       CALCULATION OF DISTRIBUTION AMOUNTS OF NEW COMMON
SHARES                    

                No fractional shares of New Common Shares shall be issued or
distributed under the Plan. Each Person entitled to receive New Common Shares   
will receive the total number of whole shares of New Common Shares to which such
Person is entitled. Whenever any distribution to a particular Person would      
otherwise call for distribution of a fraction of a share of New Common Shares   
the actual distribution of shares of such stock shall be rounded to the next    
higher or lower whole number as follows: (a) fractions 1/2 or greater shall be  
rounded to the next higher whole number, and (b) fractions of less than 1/2     
shall be rounded to the next lower whole number. The total number of shares of  
New Common Shares to be distributed to Class 6 shall be adjusted as necessary to
account for the rounding provided for in ARTICLE VII of the Plan. No            
consideration shall be provided in lieu of fractional shares that are rounded   
down.                                                                           

d.       DELIVERY OF DISTRIBUTIONS          

               Distributions to holders of Allowed Claims shall be made by
the Disbursing Agent (a) at the addresses set forth on the Proofs of Claim filed
by such holders (or at the last known addresses of such holders if no Proof of  
Claim is filed or if the Debtors have been notified of a change of address), (b)
at the addresses set forth in any written notices of address changes delivered  
to the Disbursing Agent after the date of any related Proof of Claim, (c) at the
addresses reflected in the Schedules if no Proof of Claim has been filed and the
Disbursing Agent has not received a written notice of a change of address, or   
(d) at the addresses set forth in a properly completed letter of transmittal    
accompanying securities properly remitted to the Debtors. If any holder's       
distribution is returned as undeliverable, no further distributions to such     
holder shall be made unless and until the Disbursing Agent (or Trustee as       
applicable) is notified of such holder's then current address, at which time all
missed distributions shall be made to such holder without interest. Amounts in  
respect of undeliverable distributions made by the Disbursing Agent (or the     
Trustee as applicable), shall be returned to the Reorganized Debtors (or the WGI
Creditor Trust, as applicable) until such distributions are claimed. All claims 
for undeliverable distributions made by the Disbursing Agent must be made on or 
before the first (1st) anniversary of the Effective Date, after which date all  
unclaimed property shall revert to the Reorganized Debtors free of any          
restrictions thereon and the claim of any holder or successor to such holder    
with respect to such property shall be discharged and forever barred,           
notwithstanding any federal or state escheat laws to the contrary. Nothing      
contained in the Plan shall require the Debtors, Reorganized Debtors, any       
Disbursing Agent or the Indenture Trustee to attempt to locate any holder of an 
Allowed Claim.                                                                  

e.       OLD NOTES                          

               Except as provided in ARTICLE VII of the Plan in connection
with lost, stolen, mutilated or destroyed Old Notes, each holder of an Allowed  
Claim evidenced by an Old Note shall tender such Old Note to the Disbursing     
Agent in accordance with written instructions to be provided in a letter of     
transmittal to such holders by the Disbursing Agent as promptly as practicable  
following the Effective Date. Such letter of transmittal shall specify that     
delivery of such notes or Old Notes will be effected, and risk of loss and title
thereto will pass, only upon the proper delivery of such notes or Old Notes with
the letter of transmittal in accordance with such instructions. Such letter of  
transmittal shall also include, among other provisions, customary provisions    
with respect to the authority of the holder of the applicable note or Old Notes 
to act and the authenticity of any signatures required on the letter of         
transmittal. All surrendered notes and Old Notes shall be marked as canceled and
delivered by the Trustee to Reorganized WGI.                                    

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 f.       LOST, MUTILATED OR DESTROYED OLD NOTES

        In addition to any requirements under the applicable
certificate or articles of incorporation or bylaws of the applicable Debtor, any
holder of a Claim evidenced by an Old Note that has been lost, stolen, mutilated
or destroyed shall, in lieu of surrendering Old Note, deliver to the Disbursing 
Agent (i) evidence satisfactory to the Disbursing Agent of the loss, theft,     
mutilation or destruction; and (ii) such indemnity as may be required by the    
Disbursing Agent to hold the Disbursing Agent harmless from any damages,        
liabilities or costs incurred in treating such individual as a holder of an Old 
Note. Upon compliance with ARTICLE VII of the Plan by a holder of a Claim       
evidenced by an Old Note, such holder shall, for all purposes under the Plan, be
deemed to have surrendered its Old Note, as applicable.                         

    g.       FAILURE TO SURRENDER CANCELED OLD NOTES

                  Any holder of an Old Note that fails to surrender or be deemed
to have surrendered such note or Old Note within the 2nd anniversary after the  
Effective Date shall have its claim for a distribution from the WGI Creditor    
Trust on account of such Old Note discharged and shall be forever barred from   
asserting any such claim against the WGI Creditor Trust, any Reorganized Debtor 
or their respective property.                                                   

2.       RESOLUTION AND TREATMENT OF DISPUTED, CONTINGENT, AND
UNLIQUIDATED CLAIMS AND DISPUTED INTERESTS  

a.       PROSECUTION OF OBJECTIONS          

                 After the Confirmation Date, only the Debtors the Reorganized
Debtors shall have the authority to file objections, settle, compromise,        
withdraw or litigate to judgment objections to Claims, other than the Raytheon  
Asserted Claims and Disputed Claims in Class 7, with respect to which the       
authority to object, settle, compromise or litigate to judgment shall be        
transferred to the WGI Creditor Trust pursuant to Section 9.2 of this Plan. From
and after the Effective Date, the Reorganized Debtors or the Trustee, as        
applicable, may settle or compromise any Disputed Claim without approval of the 
Bankruptcy Court.                                                               

b.       NO DISTRIBUTIONS PENDING ALLOWANCE 

              Notwithstanding any other provision of the Plan or the WGI
Creditor Trust Agreement, no payments or distributions shall be made with       
respect to all or any portion of a Disputed Claim unless and until all          
objections to such Disputed Claim have been settled or withdrawn or have been   
determined by Final Order, and the Disputed Claim, or some portion thereof, has 
become an Allowed Claim.                                                        

                  c.       DISPUTED DISTRIBUTION RESERVE; RESERVE FOR SUBSEQUENT
                   DISTRIBUTIONS TO QUALIFYING CLASS 7 CREDITORS

                  Prior to making any distributions of Trust Assets, the Trustee
shall establish appropriate reserves for Disputed Class 7 Claims, to withhold   
from any such distributions an amount in Cash equal to 100% of distributions to 
which holders of Disputed Class 7 Claims would be entitled under the Plan as of 
such date if such Disputed Class 7 Claims were Allowed Claims in their Disputed 
Class 7 Claim Amount.                                                           

            d.       DISTRIBUTIONS AFTER ALLOWANCE OF CLASS 7 CLAIMS

              The Trustee shall make payments and distributions from the
reserve established for Disputed Class 7 Claims to each holder of a Disputed    
Class 7 Claim that has become an Allowed Class 7 Claim in accordance with the   
provisions of the WGI Creditor Trust Agreement. After the date that the order or
judgment of the Bankruptcy Court allowing such Claim becomes a Final Order, the 
Trustee shall distribute, subject to the WGI Creditor Trust Agreement, to the   
holder of such Claim any Cash in the reserve established for Disputed Class 7   
Claims that would have been distributed to the holder of such claim had such    
Claim been an Allowed Class 7 Claim.                                            

E.       POST-CONSUMMATION OPERATIONS OF THE DEBTORS                            

1.       CONTINUED CORPORATE EXISTENCE                        

                Following confirmation and consummation of the Plan, subject
to the Restructuring Transactions (if any), the Reorganized Debtors will        
continue to exist as separate corporate entities in accordance with the laws of 
their respective states of incorporation and pursuant to their respective       
certificates or articles of incorporation and bylaws in effect prior to the     
Effective Date, except to the extent such certificates or articles of           
incorporation and bylaws are amended under the Plan.                            

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2.       CANCELLATION OF OLD SECURITIES AND AGREEMENTS        

           On the Effective Date, except as otherwise provided for
herein, (a) the Old Securities and any other note, bond, indenture, or other    
instrument or document evidencing or creating any indebtedness or obligation of 
a Debtor, except such notes or other instruments evidencing indebtedness or     
obligations of a Debtor that are Reinstated or amended and restated under the   
Plan, shall be canceled, and (b) the obligations of the Debtors under any       
agreements, indentures or certificates of designations governing the Old        
Securities and any other note, bond, indenture or other instrument or document  
evidencing or creating any indebtedness or obligation of a Debtor, except such  
notes or other instruments evidencing indebtedness or obligations of a Debtor   
that are Reinstated or amended and restated under the Plan, as the case may be, 
shall be discharged.                                                            

3.       CERTIFICATES OF INCORPORATION AND BYLAWS             

              The certificate or articles of incorporation and bylaws of
each Debtor will be amended as necessary to satisfy the provisions of the Plan  
and the Bankruptcy Code and will include, among other things, pursuant to       
section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance 
of non-voting equity securities, but only to the extent required by section     
1123(a)(6) of the Bankruptcy Code. The Articles of Incorporation and Bylaws of  
Reorganized WGI will include provisions allowing Mr. Dennis Washington to       
acquire, directly or indirectly, up to 40% of the New Common Shares, on a fully 
diluted basis, assuming exercise of the Washington Stock Options. SEE SECTION   
V.G. The amended Articles of Incorporation and By-laws of Reorganized WGI shall 
be in substantially the form attached to the Plan as Exhibits A and B           
respectively.                                                                   

4.       RESTRUCTURING TRANSACTIONS                           

              On or after the Effective Date, the applicable Reorganized
Debtors may enter into such transactions and may take such actions as may be    
necessary or appropriate to effect a corporate restructuring of their respective
businesses, to otherwise simplify the overall corporate structure of the        
Reorganized Debtors, or to reincorporate certain of the Subsidiary Debtors under
the laws of jurisdictions other than the laws of which the applicable Subsidiary
Debtors are presently incorporated. Such restructuring may include one or more  
mergers, consolidations, restructures, dispositions, liquidations, or           
dissolutions, as may be determined by the Debtors or Reorganized Debtors to be  
necessary or appropriate (collectively, the "Restructuring Transactions"). The  
actions to effect the Restructuring Transactions may include: (a) the execution 
and delivery of appropriate agreements or other documents of merger,            
consolidation, restructuring, disposition, liquidation, or dissolution          
containing terms that are consistent with the terms of the Plan and that satisfy
the applicable requirements of applicable state law and such other terms to     
which the applicable entities may agree; (b) the execution and delivery of      
appropriate instruments of transfer, assignment, assumption, or delegation of   
any asset, property, right, liability, duty, or obligation on terms consistent  
with the terms of the Plan and having such other terms to which the applicable  
entities may agree; (c) the filing of appropriate certificates or articles of   
merger, consolidation, or dissolution pursuant to applicable state law; and (d) 
all other actions that the applicable entities determine to be necessary or     
appropriate, including making filings or recordings that may be required by     
applicable state law in connection with such transactions. The Restructuring    
Transactions may include one or more mergers, consolidations, restructures,     
dispositions, liquidations, or dissolutions, as may be determined by the        
Reorganized Debtors to be necessary or appropriate to result in substantially   
all of the respective assets, properties, rights, liabilities, duties, and      
obligations of certain of the Reorganized Debtors vesting in one or more        
surviving, resulting, or acquiring corporations. In each case in which the      
surviving, resulting, or acquiring corporation in any such transaction is a     
successor to a Reorganized Debtor, such surviving, resulting, or acquiring      
corporation will perform the obligations of the applicable Reorganized Debtor   
pursuant to the Plan to pay or otherwise satisfy the Allowed Claims against such
Reorganized Debtor, except as provided in any contract, instrument, or other    
agreement or document effecting a disposition to such surviving, resulting, or  
acquiring corporation, which may provide that another Reorganized Debtor will   
perform such obligations.                                                       

F.       SUMMARY OF SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN         

1.       NEW COMMON SHARES                                    

             As of the Effective Date, Reorganized WGI shall issue for
distribution in accordance with the terms of the Plan the New Common Shares to  
the holders of Allowed Claims in Class 6. The issuance of the New Common Shares 
and the distribution thereof to holders of Allowed Claims in Class 6 shall be   
exempt from registration under applicable securities laws pursuant to section   
1145(a) of the Bankruptcy Code.                                                 

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2.       REGISTRATION RIGHTS AGREEMENT                        

                 Without limiting the effect of section 1145 of the Bankruptcy
Code, Reorganized WGI will enter into a Registration Rights Agreement with each 
Allowed Class 6 Claim holder (a) who by virtue of holding New Common Shares to  
be distributed under the Plan and/or its relationship with Reorganized WGI holds
more than 10% of the New Common Shares or could reasonably be deemed to be an   
"affiliate" (as such term is used within the meaning of applicable securities   
laws) of Reorganized WGI (an "Affiliated Shareholder"), and (b) who requests in 
writing that Reorganized WGI execute such agreement. The Registration Rights    
Agreements shall contain certain shelf, demand and piggyback registration rights
for the benefit of the signatories thereto. Subject to the terms and conditions 
of the Registration Rights Agreement, Affiliated Stockholders holding more than 
15% of the New Common Stock subject to the Registration Rights Agreement        
("Registrable Securities") shall be entitled to request the registration of     
their shares by the Company. Each Affiliated Stockholder shall receive one such 
"demand" right; provided that, in the aggregate, the Affiliated Stockholders    
shall be entitled to no more than two demand registrations. Subject to the terms
and conditions of the Registration Rights Agreement, the Affiliated Stockholders
shall also have the right to include their Registrable Securities in            
registrations by the Company or require the Company to file and maintain the    
effectiveness of a Form S-3 shelf registration statement providing for an       
offering of Registrable Securities to be made on a continuous basis. The        
Registration Rights Agreement shall also contain customary provisions regarding 
the registration rights, including, but not limited to, registration procedures,
transfer restrictions, withdrawal rights, holdback agreements, registration     
expenses and indemnification. The Registration Rights Agreement shall be in     
substantially the form attached to the Plan as EXHIBIT D. Reorganized WGI will  
use reasonable commercial efforts to have the New Common Shares listed for      
trading on a national securities exchange.                                      

G.       EXIT FACILITY                                                          

                On the Effective Date, the Debtors anticipate that they will
enter into the Exit Facility. The Debtors anticipate that the Exit Facility will
be used to (a) repay amounts outstanding on the Effective Date under the DIP    
Facility, (b) make other payments required to be made on the Effective Date or  
the Distribution Date, including, but not limited to, the Initial Deposit, and  
(c) provide such additional borrowing capacity as is required by the Debtors and
the Subsidiaries following the Effective Date to maintain their operations. SEE 
SECTION V.L.1.(f). As of the date hereof, the Debtors have not obtained any     
commitment for Exit Financing, and as set forth in SECTION VI.N.2.(b), such a   
commitment and entering into such a facility is a condition to the Effective    
Date of the Plan.                                                               

H.       SUMMARY OF RELEASES UNDER THE PLAN                                     

1.       RELEASES BY DEBTORS                                  

                The Plan provides for the Debtors to release certain parties
from claims (if any) of the Debtors. Direct, non-derivative claims owned by     
creditors against such entities (if any) are not being released under the Plan, 
nor does the Plan provide for a discharge of any liabilities of any non-Debtor  
person or entity. See SECTION VI.O.2 for a description of the Plan's discharge  
provisions.                                                                     

               Pursuant to the Plan, as of the Effective Date, the Debtors
and Reorganized Debtors will be deemed to forever release, waive and discharge  
all claims, obligations, suits, judgments, damages, demands, debts, rights,     
causes of action and liabilities whatsoever in connection with or related to the
Debtors and the Subsidiaries, the Chapter 11 Cases or the Plan (other than the  
rights of the Debtors or Reorganized Debtors to enforce the Plan and the        
contracts, instruments, releases, indentures, and other agreements or documents 
delivered thereunder) whether liquidated or unliquidated, fixed or contingent,  
matured or unmatured, known or unknown, foreseen or unforseen, then existing or 
thereafter arising, in law, equity or otherwise that are based in whole or part 
on any act, omission, transaction, event or other occurrence taking place on or 
prior to the Effective Date in any way relating to the Debtors, the Reorganized 
Debtors or their Subsidiaries, the Chapter 11 Cases or the Plan, and that may be
asserted by or on behalf of the Debtors or their Estates or the Reorganized     
Debtors against (i) the Debtors' or Subsidiaries' present directors, officers,  
employees, agents and professionals as of the Petition Date, (ii) the holders of
Lender Claims, (iii) CSFB, as administrative agent, collateral agent and        
arranger under the Prepetition Senior Secured Credit Facility, (iv) Bank of     
Montreal as syndication agent under the Prepetition Senior Secured Credit       
Facility, (v) BoA and U.S. Bank as documentation agent under the Prepetition    
Senior Secured Credit Facility, (vi) the DIP Agent and the holders of DIP       
Facility Claims, (vii) the respective current professionals of the entities     
released in subclauses (i)-(vi) above acting in such capacity, except for those 
persons and entities listed on SCHEDULE 5.13 to the Plan against which claims   
shall not be released under the Plan.                                           

            The Debtors are unaware of any claims against any of the
parties to be released by the Debtors that the Debtors believe have any material
value to the Debtors' estates. Specifically, with respect to officers, directors
or other agents and professionals involved in the transaction with Raytheon, the
Debtors have concluded, after extensive investigation and analysis, that they   
believe that Raytheon committed a fraud upon the Company. Moreover, the Debtors 
believe that their directors and officers acted appropriately in all respects in
connection with the Raytheon Transaction.                                       

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               With respect to professionals engaged by the Company before
the Petition Date, including with respect to the Raytheon transaction, the      
Company's engagement agreements with such professionals contain broad           
indemnities granted by the Company in favor of such parties, which indemnities  
are typically required by professionals in engagement agreements. Officers and  
directors also have broad indemnities granted to them, which is typical for     
officers and directors of corporations. Under the Plan, certain Indemnification 
Obligations are being assumed, which means such obligations will become         
obligations of the Reorganized Debtors. SEE SECTION VI.J.4. The Debtors do not  
believe that any claims against the parties to be released by the Debtors (if   
any exist) would likely result in affirmative recoveries, because such parties  
would have the right to assert indemnity claims and offset those claims against 
their potential liability, whether or not such Indemnification Obligations are  
assumed under the Plan (as proposed), or rejected. SEE SECTION VI.J.4 for a     
discussion as to why the Debtors believe the Indemnification Obligations should 
be assumed. In the event that the Bankruptcy Court were to determine that       
Indemnification Obligations could not be assumed and must be rejected, the      
claims for indemnification by such parties, rather than being assumed and       
satisfied in the ordinary course of business, would be classified in Class 7,   
but such claim holders would retain the right to assert rights of setoff against
any prepetition claims asserted against them.                                   

           The Plan also provides for the "exculpation" of various
parties with respect to their actions during the Chapter 11 Cases and their     
efforts to have the Plan confirmed. SEE SECTION VI.O.4.                         

2.       RELEASES BY HOLDERS OF LENDER CLAIMS                 

                 Pursuant to the Plan, to the fullest extent permissible under
applicable law, as of the Effective Date, in consideration for the obligations  
of the Debtors and the Reorganized Debtors under the Plan and the Cash,         
securities, contracts, instruments, releases and other agreements or documents  
to be delivered in connection with the Plan, each of the Prepetition Secured    
Lenders, any individual, corporation or other entity that was at any time       
formerly a Lender and the DIP Lenders will be deemed to forever release, waive  
and discharge all claims, obligations, suits, judgments, damages, demands,      
debts, rights, causes of action and liabilities (other than the rights to       
enforce the Debtors' or the Reorganized Debtors' obligations under the Plan and 
the securities, contracts, instruments, releases and other agreements and       
documents delivered thereunder), whether liquidated or unliquidated, fixed or   
contingent, matured or unmatured, known or unknown, foreseen or unforseen, then 
existing or thereafter arising, in law, equity or otherwise that are based in   
whole or in part on any act, omission, transaction, event or other occurrence   
taking place on or prior to the Effective Date in any way relating to the       
Debtors or Subsidiaries, the Reorganized Debtors, the Chapter 11 Cases, or the  
Plan against (i) the Debtors, the Subsidiaries and the Reorganized Debtors, (ii)
the present directors, officers and employees of the Debtors or Subsidiaries as 
of the Effective Date, or (iii) their respective current professionals as of the
Effective Date (including the present and former officers, directors, employees,
shareholders and professionals of the foregoing), acting in such capacity,      
except for those persons and entities listed on SCHEDULE 5.13 to the Plan       
against which claims shall not be released under the Plan.                      

3.       INJUNCTION RELATED TO RELEASES                       

         As further provided in SECTION 12.11 of the Plan, the
Confirmation Order will enjoin the prosecution, whether directly, derivatively  
or otherwise, of any claim, obligation, suit, judgment, damage, demand, debt,   
right, cause of action, liability or interest released, discharged or terminated
pursuant to the Plan.                                                           

I.       COMPENSATION AND BENEFIT PROGRAMS                                      

                  Except and to the extent previously assumed by an order of the
Bankruptcy Court on or before the Confirmation Date, all employee compensation  
and benefit programs of the Debtors, including programs subject to sections 1114
and 1129(a)(13) of the Bankruptcy Code, entered into before or after the        
Petition Date and not since terminated, shall be deemed to be, and shall be     
treated as though they are, executory contracts that are assumed except for (i) 
executory contracts or plans specifically rejected pursuant to the Plan (to the 
extent such rejection does not violate sections 1114 and 1129(a)(13) of the     
Bankruptcy Code) and (ii) executory contracts or plans as have previously been  
rejected, are the subject of a motion to reject, or have been specifically      
waived by the beneficiaries of any plans or contracts; PROVIDED, HOWEVER, that  
the Debtors' obligations, if any, to pay all "retiree benefits" (as defined in  
section 1114(a) of the Bankruptcy Code) shall continue.                         

                 On the Effective Date, management and designated employees of
Reorganized WGI and the other Reorganized Debtors shall receive stock options   
which are more specifically described in the Management Option Plan, in         
substantially the form attached to the Plan as EXHIBIT C.                       

            The principal terms of the Management Option Plan are as
follows. Under the Management Option Plan, options to purchase up to 10% of the 
New Common Shares outstanding, on a fully diluted basis, shall be authorized to 
be granted. All options will                                                    

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vest over a 3 year period. One half of these options shall be issued on the     
Effective Date to members of existing management, as determined and to be       
announced prior to the Confirmation Hearing, with strike prices set based upon  
the value of the New Common Stock established in this Disclosure Statement. SEE 
SECTION XI.E. The remaining one half of the options issued under the Management 
Option Plan shall be available for issuance at the discretion of the Board of   
Directors of Reorganized WGI, with strike prices based upon then- current market
conditions as determined by the Board of Reorganized WGI.                       

J.       DIRECTORS AND OFFICERS OF REORGANIZED DEBTORS                          

1.       APPOINTMENT                                          

           The initial board of directors of Reorganized WGI shall
consist of nine (9) directors. Mr. Dennis Washington, Mr. Stephen Hanks and Mr. 
David Batchelder shall each be directors of Reorganized WGI with Mr. Washington 
serving as Chairman without cash compensation for at least two (2) years after  
the Effective Date so long as the Board desires him to do so. The Prepetition   
Secured Lenders shall be entitled to appoint six (6) directors. The Confirmation
Order may contain provisions providing for a staggered board for Reorganized    
WGI, as agreed to by WGI and the Prepetition Secured Lenders. The Prepetition   
Secured Lenders shall file with the Bankruptcy Court and give to WGI written    
notice of the identities of such members on a date that is not less than five   
(5) days prior to the Confirmation Hearing. The boards of directors and         
executive officers of the remaining Reorganized Debtors shall consist of        
directors and officers as determined by Reorganized WGI on the Effective Date or
thereafter.                                                                     

2.       TERMS                                                

               Reorganized WGI board members shall serve for initial terms
commencing on the Effective Date as determined be the Debtors and the           
Prepetition Secured Lenders and approved in the Confirmation Order.             

3.       VACANCIES                                            

                  Any vacancy in the directorship prior to the expiration of the
initial term (i) selected by the Prepetition Secured Lenders shall in the case  
of the resignation of such director, be filled by a person designated by such   
director as his/her replacement to serve out the remainder of the applicable    
term; and (ii) selected by WGI shall be filled by a person designated by the    
Chief Executive Officer of Reorganized WGI to serve out the remainder of the    
applicable term.                                                                

        4.       TREATMENT OF DIRECTOR AND OFFICER INDEMNIFICATION OBLIGATIONS
UNDER THE PLAN                              

                  Indemnification Obligations are defined in SECTION 1.51 of the
Plan as obligations of any of the Debtors or Subsidiaries to indemnify,         
reimburse or provide contribution to any present or former officer, director or 
employee, or any present or former professionals or advisors of the Debtors,    
pursuant to by-laws, articles of incorporation or otherwise as may be in        
existence immediately prior to the Petition Date, including, without limitation,
accountants, auditors, financial consultants, underwriters or attorneys, whether
pursuant to charter, by law, contract, statute or otherwise, regardless of      
whether the indemnification is owed in connection with a pre- petition or       
post-petition occurrence. Under the Plan, all Indemnification Obligations shall 
be treated as though they are executory contracts that are assumed pursuant to  
section 365 of the Bankruptcy Code under the Plan and such obligations shall    
remain unaffected and shall not be discharged or impaired hereby, except for the
indemnification claims of Raytheon or any of its subsidiaries, officers,        
directors, employees, agents or professionals or any party listed on SCHEDULE   
5.13 or SCHEDULE 6.3 to the Plan, which claims shall be deemed rejected pursuant
to SECTION 6.3 of the Plan. The Debtors believe the Indemnification Obligations 
to be assumed should be assumed because doing so is in the best interests of    
these estates, and because the Debtors do not believe that their assumption will
have a material adverse impact on the Reorganized Debtors. The Debtors believe  
that assuming these Indemnification Obligations is in the Debtors' best         
interests because the ability to retain management personnel, other employees,  
and professionals and advisors is critical to the ongoing viability of the      
Debtors. Maintaining standard indemnity agreements, which are common to large   
corporations, is necessary to be able to preserve employee morale and to ensure 
that key employees will not leave the Debtors' employ. Moreover, any director   
and officer liability insurance coverage in place prior to the Petition Date    
will remain in place during the Chapter 11 Cases and after the Effective Date.  
If the Indemnification Obligations are not assumed, Claims by indemnified       
parties would be General Unsecured Claims in Class 7, subject to claims of      
rights of setoff and/or recoupment.                                             

K.       REVESTING OF ASSETS                                                    

           Pursuant to section 1141(b) of the Bankruptcy Code, all
property of each Debtor's Estate, together with any property of each Debtor that
is not property of its Estate and that is not specifically disposed of pursuant 
to the Plan, shall revest in the applicable                                     

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Reorganized Debtor on the Effective Date. Thereafter, the Reorganized Debtors   
may operate their businesses and may use, acquire and dispose of property free  
of any restrictions of the Bankruptcy Code, the Bankruptcy Rules and the        
Bankruptcy Court. As of the Effective Date, all property of each Reorganized    
Debtor shall be free and clear of all Liens, Claims and Interests, except as    
specifically provided in the Plan or the Confirmation Order. Without limiting   
the generality of the foregoing, each Reorganized Debtor may, without           
application to or approval by the Bankruptcy Court, pay fees that it incurs     
after the Effective Date for professional services and expenses.                

L.       PRESERVATION OF RIGHTS OF ACTION                                       

                Except as otherwise provided in the Plan or the Confirmation
Order, or in any contract, instrument, release, indenture or other agreement    
entered into in connection with the Plan, in accordance with section 1123(b) of 
the Bankruptcy Code, the Reorganized Debtors shall retain and may enforce, sue  
on, settle or compromise (or decline to do any of the foregoing) all Litigation 
Claims that the Debtors or the Estates may hold against any Person or entity.   
Each Debtor or its successor(s) may pursue such retained Litigation Claims as   
appropriate, in accordance with the best interests of the Reorganized Debtor or 
its successor(s) who hold such rights. The Debtors do not believe that the      
Litigation Claims will have a material impact on the businesses or value of the 
Reorganized Debtors. The Debtors have not undertaken a detailed analysis of any 
potential preference, fraudulent transfer or other actions they may have under  
sections 544, 546, 547, 548 and 550 of the Bankruptcy Code (other than with     
respect to Raytheon).                                                           

              The failure of the Debtors to specifically list any claim,
right of action, suit, or proceeding herein or in the Plan does not, and will   
not be deemed to, constitute a waiver or release by the Debtors of such claim,  
right of action, suit, or proceeding, and the Reorganized Debtors will retain   
the right to pursue additional claims, rights of action, suits or proceedings.  
In addition, at any time before the Effective Date, notwithstanding anything in 
the Plan to the contrary, the Debtors or the Reorganized Debtors may settle some
or all of the Litigation Claims with the approval of the Bankruptcy Court       
pursuant to Fed. R. Bankr. P. 9019.                                             

M.       OTHER MATTERS                                                          

1.       TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

                  Under section 365 of the Bankruptcy Code, the Debtors have the
right, subject to Bankruptcy Court approval, to assume or reject any executory  
contracts or unexpired leases. If the Debtors reject an executory contract or   
unexpired lease that was entered into before the Petition Date, the contract or 
lease will be treated as if it had been breached on the date immediately        
preceding the Petition Date, and the other party to the agreement will have an  
Impaired Unsecured Claim for damages incurred as a result of the rejection. In  
the case of rejection of employment severance agreements and real property      
leases, damages are subject to certain limitations imposed by sections 365 and  
502 of the Bankruptcy Code.                                                     

a.       ASSUMED CONTRACTS AND LEASES       

                 Except as otherwise provided in the Plan, or in any contract,
instrument, release, indenture or other agreement or document entered into in   
connection with the Plan, as of the Effective Date each Debtor shall be deemed  
to have assumed each executory contract and unexpired lease to which it is a    
party, unless such contract or lease (i) was previously assumed or rejected by  
such Debtor, (ii) previously expired or terminated pursuant to its own terms,   
(iii) is the subject of a motion pending before the Bankruptcy Court as of the  
Confirmation Date to assume or reject such contract or lease or (iv) is listed  
on SCHEDULE 6.3 attached to the Plan as being an executory contract or unexpired
lease to be rejected, PROVIDED, HOWEVER, that the Debtors reserve their right,  
at any time prior to the Confirmation Date, to amend SCHEDULE 6.3 to delete any 
unexpired lease or executory contract therefrom or add any unexpired lease or   
executory contract thereto. To the extent that an executory contract or         
unexpired lease is not listed on SCHEDULE 6.3, such executory contract or       
unexpired lease shall be deemed assumed. The Confirmation Order shall constitute
an order of the Bankruptcy Court under section 365 of the Bankruptcy Code       
approving the contract and lease assumptions described above, as of the         
Effective Date.                                                                 

               Each executory contract and unexpired lease that is assumed
and relates to the use, ability to acquire, or occupancy of real property shall 
include (i) all modifications, amendments, supplements, restatements, or other  
agreements made directly or indirectly by any agreement, instrument, or other   
document that in any manner affect such executory contract or unexpired lease   
and (ii) all executory contracts or unexpired leases appurtenant to the         
premises, including all easements, licenses, permits, rights, privileges,       
immunities, options, rights of first refusal, powers, uses, usufructs,          
reciprocal easement agreements, vaults, tunnel or bridge agreements or          
franchises, and any other interests in real estate or rights IN REM related to  
such premises, unless any of the foregoing agreements has been rejected pursuant
to an order of the Bankruptcy Court.                                            

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            b.       PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND
LEASES                    

             Any monetary amounts by which each executory contract and
unexpired lease to be assumed pursuant to the Plan is in default will be        
satisfied, under section 365(b)(1) of the Bankruptcy Code, at the option of the 
Debtor party assuming such contract or lease, by Cure. If there is a dispute    
regarding (i) the nature or amount of any Cure, (ii) the ability of a           
Reorganized Debtor or any assignee to provide "adequate assurance of future     
performance" (within the meaning of section 365 of the Bankruptcy Code) under   
the contract or lease to be assumed, or (iii) any other matter pertaining to    
assumption, Cure will occur following the entry of a Final Order resolving the  
dispute and approving the assumption or assumption and assignment, as the case  
may be.                                                                         

c.       REJECTED CONTRACTS AND LEASES      

                On the Effective Date, each executory contract and unexpired
lease listed on SCHEDULE 6.3 to the Plan shall be rejected pursuant to section  
365 of the Bankruptcy Code. Each contract or lease listed on SCHEDULE 6.3 shall 
be rejected only to the extent that any such contract or lease constitutes an   
executory contract or unexpired lease; PROVIDED, HOWEVER, that the Debtors      
reserve their right, at any time prior to the Confirmation Date, to amend       
SCHEDULE 6.3 to delete any unexpired lease or executory contract therefrom or   
add any unexpired lease or executory contract thereto. To the extent that an    
executory contract or unexpired lease is not listed on SCHEDULE 6.3, such       
executory contract or unexpired lease shall be deemed assumed. Listing a        
contract or lease on SCHEDULE 6.3 shall not constitute an admission by a Debtor 
nor a Reorganized Debtor that such contract or lease is an executory contract or
unexpired lease or that such Debtor or Reorganized Debtor has any liability     
thereunder. The Confirmation Order shall constitute an order of the Bankruptcy  
Court approving the rejections described above, pursuant to section 365 of the  
Bankruptcy Code, as of the Effective Date.                                      

d.       REJECTION DAMAGES BAR DATE         

         If the rejection by a Debtor, pursuant to the Plan or
otherwise, of an executory contract or unexpired lease results in a Claim, then 
such Claim shall be forever barred and shall not be enforceable against any     
Debtor or Reorganized Debtor or the properties of any of them unless a proof of 
claim is filed with the clerk of the Bankruptcy Court and served upon counsel to
the Debtors, counsel to the Creditors' Committee, within thirty (30) days after 
service of the earlier of (i) notice of the Confirmation Order, or (ii) other   
notice that the executory contract or unexpired lease has been rejected.        

         If any party to a lease or contract has any questions
regarding the status or treatment of such lease or contract, please call the    
following the telephone number: (866) 251-5464.                                 

    2.       SPECIAL PROVISIONS FOR WARRANTY AND INDEMNITY OBLIGATIONS
ARISING OUT OF COMPLETED PROJECTS           

             Notwithstanding anything to the contrary in the Plan, all
Completed Projects and all executory obligations thereunder (including warranty 
and/or indemnity obligations), other than those Completed Projects explicitly   
set forth on Schedule 6.5 to the Plan, shall be treated as executory contracts  
that are rejected pursuant to section 365 of the Bankruptcy Code. Those         
Completed Projects and all executory obligations thereunder (including warranty 
and/or indemnity obligations) explicitly set forth on Schedule 6.5 to the Plan  
shall be treated as executory contracts that are assumed pursuant to Section 365
of the Bankruptcy Code, and obligations thereunder shall be satisfied in the    
ordinary course of business. The Debtors reserve the right to amend Schedule 6.5
to the Plan to delete or add any Completed Project thereto, at any time prior to
the Confirmation Date. The fact that a Completed Project is listed on Schedule  
6.5 to the Plan shall not constitute an admission by a Debtor or a Reorganized  
Debtor that such Completed Project is an executory contract or that a Debtor or 
Reorganized Debtor has any liability thereunder.                                

3.       ADMINISTRATIVE CLAIMS                                

              All requests for payment of an Administrative Claim (other
than as set forth in Sections 3.1 and 12.1 of the Plan) must be filed with the  
Bankruptcy Court and served on counsel for the Debtors and counsel for the      
Trustee no later than forty-five (45) days after the Effective Date. Unless the 
Debtors object to an Administrative Claim within forty-five (45) Business Days  
after receipt, such Administrative Claim shall be deemed allowed in the amount  
requested. In the event that the Debtors object to an Administrative Claim, the 
Bankruptcy Court shall determine the Allowed amount of such Administrative      
Claim. Notwithstanding the foregoing, no request for payment of an              
Administrative Claim need be filed with respect to an Administrative Claim which
is paid or payable by a Debtor in the ordinary course of business.              

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4.       PROFESSIONAL FEE CLAIMS                              

           All final requests for compensation or reimbursement of
Professional Fees pursuant to sections 327, 328, 330, 331, 503(b) or 1103 of the
Bankruptcy Code for services rendered to the Debtors or the Creditors' Committee
prior to the Effective Date and Substantial Contribution Claims under section   
503(b)(4) of the Bankruptcy Code must be filed and served on the Reorganized    
Debtors and their counsel no later than 60 days after the Effective Date, unless
otherwise ordered by the Bankruptcy Court. Objections to applications of such   
Professionals or other entities for compensation or reimbursement of expenses   
must be filed and served on the Reorganized Debtors and their counsel and the   
requesting Professional or other entity no later than 60 days (or such longer   
period as may be allowed by order of the Bankruptcy Court) after the date on    
which the applicable application for compensation or reimbursement was served.  

5.       WITHHOLDING AND REPORTING REQUIREMENTS               

                In connection with the Plan and all distributions hereunder,
the Disbursing Agent shall, to the extent applicable, comply with all tax       
withholding and reporting requirements imposed by any federal, state,           
provincial, local or foreign taxing authority, and all distributions hereunder  
shall be subject to any such withholding and reporting requirements. The        
Disbursing Agent shall be authorized to take any and all actions that may be    
necessary or appropriate to comply with such withholding and reporting          
requirements. Notwithstanding any other provision of the Plan (i) each holder of
an Allowed Claim that is to receive a distribution of New Common Shares pursuant
to the Plan shall have sole and exclusive responsibility for the satisfaction   
and payment of any tax obligations imposed by any governmental unit, including  
income, withholding and other tax obligations, on account of such distribution, 
and (ii) no distribution shall be made to or on behalf of such holder pursuant  
to the Plan unless and until such holder has made arrangements satisfactory to  
the Disbursing Agent for the payment and satisfaction of such tax obligations.  
Any New Common Shares to be distributed pursuant to the Plan shall, pending the 
implementation of such arrangements, be treated as an undeliverable distribution
pursuant to SECTION 7.7 of the Plan.                                            

6.       SETOFFS                                              

                  The Reorganized Debtors may, but shall not be required to, set
off against any Claim and the payments or other distributions to be made        
pursuant to the Plan in respect of such Claim, claims of any nature whatsoever  
that the Debtors or Reorganized Debtors may have against the holder of such     
Claim; PROVIDED, HOWEVER, that neither the failure to do so nor the allowance of
any Claim hereunder shall constitute a waiver or release by the Reorganized     
Debtors of any such claim that the Debtors or Reorganized Debtors may have      
against such holder. Notwithstanding anything to the contrary, the Debtors and  
Reorganized Debtors will not exercise any right of setoff against any Lender,   
any agents under the Prepetition Senior Secured Credit Facility or the DIP      
Facility, or the DIP Lenders.                                                   

7.       CONTINUATION OF CERTAIN ORDERS                       

             Notwithstanding anything in the Plan to the contrary, the
Debtors will continue to pay any Claims authorized to be paid by an order of the
Bankruptcy Court during the Chapter 11 Cases, pursuant to the terms and         
conditions of any such order.                                                   

N.       CONFIRMATION AND/OR CONSUMMATION                                       

                  Described below are certain important considerations under the
Bankruptcy Code in connection with confirmation of the Plan.                    

1.       REQUIREMENTS FOR CONFIRMATION OF THE PLAN            

         The Bankruptcy Court will determine at the hearing on
confirmation of the Plan (the "Confirmation Hearing") whether the following     
requirements for confirmation, set forth in section 1129 of the Bankruptcy Code,
have been satisfied:                                                            

                a.       The Plan complies with the applicable provisions of
the Bankruptcy Code.      

          b.       The Debtors have complied with the applicable
        provisions of the Bankruptcy Code.

                c.       The Plan has been proposed in good faith and not by
 any means forbidden by law.

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                d.       Any payment made or promised by the Debtors or by a
                           person issuing securities or acquiring property under
                         the Plan for services or for costs and expenses in,
                        or in connection with, the Chapter 11 Cases, or in
                          connection with the Plan and incident to the Chapter
                           11 Cases, has been disclosed to the Bankruptcy Court,
                          and any such payment made before confirmation of the
                           Plan is reasonable, or if such payment is to be fixed
                     after confirmation of the Plan, such payment is
                        subject to the approval of the Bankruptcy Court as
reasonable.               

            e.       The Debtors have disclosed (i) the identity and
                           affiliations of (x) any individual proposed to serve,
                    after confirmation of the Plan, as a director,
                   officer, or voting trustee of the Reorganized
               Debtors, (y) any affiliate of the Debtors
                        participating in a joint plan with the Debtors, or
                          (z) any successor to the Debtors under the Plan (and
                           the appointment to, or continuance in, such office of
                         such individual(s) is consistent with the interests
                       of Creditors and Interest holders and with public
                        policy), and (ii) the identity of any insider that
                         will be employed or retained by the Debtors and the
                  nature of any compensation for such insider.

               f.       With respect to each Class of Claims or Interests,
                         each Impaired Creditor and Impaired Interest holder
                     either has accepted the Plan or will receive or
                       retain under the Plan on account of the Claims or
                         Interests held by such entity, property of a value,
                         as of the Effective Date, that is not less than the
                        amount that such entity would receive or retain if
                    the Debtors were liquidated on such date under
                         Chapter 7 of the Bankruptcy Code. SEE SECTION XI.C.

             g.       The Plan provides that Administrative Claims and
                         Priority Claims other than Priority Tax Claims will
                    be paid in full on the Effective Date and that
                         Priority Tax Claims will receive on account of such
                      Claims deferred cash payments, over a period not
                         exceeding six years after the date of assessment of
                        such Claims, of a value, as of the Effective Date,
                           equal to the Allowed Amount of such Claims, except to
                      the extent that the holder of any such Claim has
                  agreed to a different treatment. SEE SECTION
VI.C.2.(a).               

                h.       If a Class of Claims is Impaired under the Plan, at
                         least one Class of Impaired Claims has accepted the
                          Plan, determined without including any acceptance of
                        the Plan by insiders holding Claims in such Class.

                  i.       Confirmation of the Plan is not likely to be followed
                           by the liquidation, or the need for further financial
                        reorganization, of the Debtors or any successor to
                         the Debtors under the Plan, unless such liquidation
                    or reorganization is proposed in the Plan. SEE
SECTION XI.A.             

             j.       The Plan provides for the continuation after the
                        Effective Date of all retiree benefits, if any, at
               the level established pursuant to section
                        1114(e)(1)(B) or 1114(g) of the Bankruptcy Code at
                         any time prior to confirmation of the Plan, for the
                       duration of the period the Debtors have obligated
          themselves to provide such benefits.

                The Debtors believe that, upon receipt of the votes required
to confirm the Plan, the Plan will satisfy all the statutory requirements of    
Chapter 11 of the Bankruptcy Code, that the Debtors have complied or will have  
complied with all of the requirements of Chapter 11, and that the Plan has been 
proposed and submitted to the Bankruptcy Court in good faith.                   

2.       CONDITIONS TO CONFIRMATION AND CONSUMMATION          

a.       CONDITIONS TO CONFIRMATION         

               The following are conditions precedent to the occurrence of
the Confirmation Date: (i) the entry of an order finding that the Disclosure    
Statement contains adequate information pursuant to section 1125 of the         
Bankruptcy Code, and (ii) the proposed Confirmation Order shall be in form and  
substance acceptable to the Debtors and the Agent under the Prepetition Senior  
Secured Credit Facility.                                                        

b.       CONDITIONS TO EFFECTIVE DATE       

               The following are conditions precedent to the occurrence of
the Effective Date, each of which may be satisfied or waived in accordance with 
SECTION 10.2 of the Plan:                                                       

                     (i)      The Confirmation Order shall have been
                                    entered and become a Final Order in form and
 substance

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                                  reasonably satisfactory to the Debtors and
                              the Agent under the Prepetition Senior
                          Secured Credit Facility and shall:

                                         (1)      provide that the Debtors
                                                     and Reorganized Debtors are
                                                    authorized and directed to
                                                    take all actions necessary
                                                 or appropriate to enter
                                             into, implement and
                                                   consummate the contracts,
                                                instruments, releases,
                                                leases, indentures and
                                             other agreements or
                                              documents created in
                                                     connection with the Plan or
                                           the Restructuring
                                       Transactions;

                                          (2)      authorize the issuance of
                                                    the New Common Shares, the
                                                   Washington Stock Options,
                                                 and Management Options;

                                         (3)      find that the New Common
                                                 Shares issued under the
                                                     Plan in exchange for Claims
                                                 against the Debtors are
                                                  exempt from registration
                                                     under the Securities Act of
                                                  1933 pursuant to section
                                                     1145 of the Bankruptcy Code
                                                   except to the extent that
                                                   holders of the New Common
                                                    Shares are "underwriters,"
                                                    as that term is defined in
                                             section 1145 of the
                                          Bankruptcy Code.

                         (ii)     The Reorganized Debtors shall have entered
               into the Exit Facility;

                     (iii)    All Plan Exhibits shall be in form and
                              substance reasonably acceptable to the
                                   Debtors and the Agent under the Prepetition
                                Senior Secured Credit Facility and shall
                         have been executed and delivered.

                    (iv)     All actions, documents and agreements
                                  necessary to implement the Plan shall have
                  been effected or executed.

c.       WAIVER OF CONDITIONS               

                Each of the conditions set forth in SECTION 10.2 of the Plan
may be waived in whole or in part by the Debtors with the written consent of the
Agent under the Prepetition Senior Secured Credit Facility, without any ot