FWLT (MM)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 26, 2008

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 001-31305

FOSTER WHEELER LTD.

(Exact name of registrant as specified in its charter)

Bermuda		22-3802649
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Perryville Corporate Park
Clinton, New Jersey		08809-4000
(Address of principal executive offices)		(Zip Code)

(908) 730-4000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

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

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

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 133,753,790 common shares ($0.01 par value) were outstanding as of October 24, 2008.

 

 

FOSTER WHEELER LTD.
INDEX

Part I FINANCIAL INFORMATION		3
Item 1 — Financial Statements (Unaudited):		3
Condensed Consolidated Statement of Operations for the Fiscal Quarters and Nine Months Ended September 26, 2008 and September 28, 2007		3
Condensed Consolidated Balance Sheet as of September 26, 2008 and December 28, 2007		4
Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Fiscal Nine Months Ended September 26, 2008 and September 28, 2007		5
Condensed Consolidated Statement of Comprehensive Income for the Fiscal Quarters and Nine Months Ended September 26, 2008 and September 28, 2007		6
Condensed Consolidated Statement of Cash Flows for the Fiscal Nine Months Ended September 26, 2008 and September 28, 2007		7
Notes to Condensed Consolidated Financial Statements		8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3 — Quantitative and Qualitative Disclosures about Market Risk		64
Item 4 — Controls and Procedures		64
Part II OTHER INFORMATION		65
Item 1 — Legal Proceedings		65
Item 1A — Risk Factors		65
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		65
Item 3 — Defaults Upon Senior Securities		65
Item 4 — Submission of Matters to a Vote of Security Holders		65
Item 5 — Other Information		65
Item 6 — Exhibits		66
Signatures		67
EX-10.2: EMPLOYMENT AGREEMENT
EX-10.3: AGREEMENT FOR THE TERMINATION OF FIXED TERM EMPLOYMENT CONTRACT
EX-10.4: FIXED TERM EMPLOYMENT AGREEMENT
EX-10.5: FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
EX-23.1: CONSENT OF ANALYSIS, RESEARCH & PLANNING CORPORATION
EX-23.2: CONSENT OF PETERSON RISK CONSULTING
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FOSTER WHEELER LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands of dollars, except per share amounts)

(unaudited)

		Fiscal Quarters Ended								Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Operating revenues		$	1,718,355			$	1,299,872			$	5,215,101			$	3,641,760
Cost of operating revenues			(1,489,095	)			(1,101,912	)			(4,522,654	)			(3,067,442	)
Contract profit			229,260				197,960				692,447				574,318
Selling, general and administrative expenses			(74,831	)			(62,686	)			(218,771	)			(180,079	)
Other income, net			(1,178	)			22,319				36,995				43,730
Other deductions, net			(8,986	)			(7,672	)			(27,080	)			(33,075	)
Interest income			12,457				12,467				35,155				24,263
Interest expense			(5,193	)			(4,716	)			(16,204	)			(14,652	)
Minority interest in income of consolidated affiliates			(834	)			(1,765	)			(1,859	)			(5,038	)
Net asbestos-related gain/(provision)			(1,725	)			8,633				30,738				8,633
Income before income taxes			148,970				164,540				531,421				418,100
Provision for income taxes			(21,050	)			(35,439	)			(104,683	)			(102,324	)
Net income		$	127,920			$	129,101			$	426,738			$	315,776
Earnings per common share (see Note 1):
Basic		$	0.89			$	0.91			$	2.96			$	2.24
Diluted		$	0.88			$	0.89			$	2.94			$	2.18

See notes to condensed consolidated financial statements.

FOSTER WHEELER LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands of dollars, except share data and per share amounts)

(unaudited)

		September 26,				December 28,
		2008				2007
ASSETS
Current Assets:
Cash and cash equivalents		$	1,308,924			$	1,048,544
Accounts and notes receivable, net:
Trade			634,975				580,883
Other			121,518				98,708
Contracts in process			291,466				239,737
Prepaid, deferred and refundable income taxes			39,955				36,532
Other current assets			30,102				39,979
Total current assets			2,426,940				2,044,383
Land, buildings and equipment, net			364,377				337,485
Restricted cash			26,430				20,937
Notes and accounts receivable — long-term			2,103				2,941
Investments in and advances to unconsolidated affiliates			210,168				198,346
Goodwill, net			65,060				53,345
Other intangible assets, net			61,705				61,190
Asbestos-related insurance recovery receivable			287,695				324,588
Other assets			90,934				93,737
Deferred income taxes			102,154				112,036
TOTAL ASSETS		$	3,637,566			$	3,248,988
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current installments on long-term debt		$	19,490			$	19,368
Accounts payable			360,675				372,531
Accrued expenses			319,329				331,814
Billings in excess of costs and estimated earnings on uncompleted contracts			835,236				744,236
Income taxes payable			69,919				55,824
Total current liabilities			1,604,649				1,523,773
Long-term debt			203,582				185,978
Deferred income taxes			81,139				81,008
Pension, postretirement and other employee benefits			254,308				290,741
Asbestos-related liability			334,142				376,803
Other long-term liabilities and minority interest			203,843				216,916
Commitments and contingencies
TOTAL LIABILITIES			2,681,663				2,675,219
Temporary Equity:
Non-vested restricted awards subject to redemption			4,892				2,728
TOTAL TEMPORARY EQUITY			4,892				2,728
Shareholders’ Equity:
Preferred shares:
$0.01 par value; authorized: September 26, 2008 - 901,150 shares and December 28, 2007 - 901,943 shares; issued and outstanding: September 26, 2008 - 1,094 shares and December 28, 2007 - 1,887 shares			—				—
Common shares:
$0.01 par value; authorized: September 26, 2008 - 296,007,803 shares and December 28, 2007 - 296,007,011 shares; issued and outstanding: September 26, 2008 - 142,971,885 shares and December 28, 2007 - 143,877,804 shares			1,430				1,439
Paid-in capital			1,346,884				1,385,311
Accumulated deficit			(127,857	)			(554,595	)
Accumulated other comprehensive loss			(269,446	)			(261,114	)
TOTAL SHAREHOLDERS’ EQUITY			951,011				571,041
TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY		$	3,637,566			$	3,248,988

See notes to condensed consolidated financial statements.

FOSTER WHEELER LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands of dollars, except share data)

(unaudited)

		Fiscal Nine Months Ended
		September 26, 2008								September 28, 2007
		Shares				Amount				Shares				Amount
Preferred Shares:
Balance at beginning of period			1,887			$	—				3,658			$	—
Preferred shares converted into common shares			(793	)			—				(290	)			—
Balance at end of period			1,094			$	—				3,368			$	—
Common Shares:
Balance at beginning of period			143,877,804			$	1,439				138,182,948			$	1,382
Retirement of common shares purchased under common share repurchase program			(1,285,548	)			(13	)			—				—
Issuance of common shares upon exercise of common share purchase warrants			85,057				1				1,799,988				18
Issuance of common shares upon exercise of stock options			128,996				1				2,905,998				29
Issuance of common shares upon vesting of restricted awards			62,486				1				684,796				7
Issuance of common shares upon conversion of preferred shares			103,090				1				37,690				—
Balance at end of period			142,971,885			$	1,430				143,611,420			$	1,436
Paid-in Capital:
Balance at beginning of period						$	1,385,311							$	1,348,800
Retirement of common shares purchased under common share repurchase program							(50,014	)							—
Issuance of common shares upon exercise of common share purchase warrants							398								8,422
Issuance of common shares upon exercise of stock options							2,594								16,211
Share-based compensation expense-stock options and restricted awards							8,436								4,356
Excess tax benefit related to equity-based incentive program							161								4,130
Issuance of common shares upon vesting of restricted awards							(1	)							(7	)
Issuance of common shares upon conversion of preferred shares							(1	)							—
Balance at end of period						$	1,346,884							$	1,381,912
Accumulated Deficit:
Balance at beginning of period						$	(554,595	)						$	(944,113	)
Cumulative effect of adoption of FIN 48							—								(4,356	)
Balance at beginning of period, as adjusted							(554,595	)							(948,469	)
Net income for the period							426,738								315,776
Balance at end of period						$	(127,857	)						$	(632,693	)
Accumulated Other Comprehensive Loss:
Balance at beginning of period						$	(261,114	)						$	(343,342	)
Foreign currency translation adjustments							(19,490	)							19,495
Net gain/(loss) on derivative instruments designated as cash flow hedges, net of tax							(6	)							1,279
Pension and other postretirement benefits, net of tax							11,164								11,882
Balance at end of period						$	(269,446	)						$	(310,686	)
Total Shareholders’ Equity						$	951,011							$	439,969

See notes to condensed consolidated financial statements.

FOSTER WHEELER LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in thousands of dollars)

(unaudited)

		Fiscal Quarters Ended			Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Net income		$	127,920			$	129,101			$	426,738			$	315,776
Foreign currency translation adjustments			(39,749	)			10,113				(19,490	)			19,495
Net gain/(loss) on derivative instruments designated as cash flow hedges, net of tax			(3,268	)			(587	)			(6	)			1,279
Pension and other postretirement benefits, net of tax			3,625				3,984				11,164				11,882
Comprehensive income		$	88,528			$	142,611			$	418,406			$	348,432

See notes to condensed consolidated financial statements.

FOSTER WHEELER LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of dollars)

(unaudited)

		Fiscal Nine Months Ended
		September 26,				September 28,
		2008				2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	426,738			$	315,776
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization			33,366				27,120
Net asbestos-related provision/(gain)			5,175				(8,633	)
Share-based compensation expense-stock options and restricted awards			10,600				5,100
Excess tax benefit related to equity-based incentive program			(161	)			(3,888	)
Deferred tax			5,499				15,146
Loss/(gain) on sale of assets			831				(6,887	)
Equity in the net earnings of partially-owned affiliates, net of dividends			(4,985	)			(23,150	)
Other noncash items			1,875				8,152
Changes in assets and liabilities:
Increase in receivables			(96,337	)			(81,496	)
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts			40,047				(27,663	)
(Decrease)/increase in accounts payable and accrued expenses			(10,556	)			79,347
Increase in income taxes payable			13,514				14,462
Net change in other assets and liabilities			(17,814	)			(71,735	)
Net cash provided by operating activities			407,792				241,651
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired			(14,856	)			(6,319	)
Change in restricted cash			(6,143	)			(2,848	)
Capital expenditures			(62,415	)			(33,504	)
Proceeds from sale of assets			718				6,732
Investments in and advances to unconsolidated affiliates			(4,429	)			(1,242	)
Return of investment from unconsolidated affiliates			2,330				6,324
Net cash used in investing activities			(84,795	)			(30,857	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase and retirement of common shares			(50,027	)			—
Distributions to minority third-party ownership interests			(9,625	)			(5,179	)
Proceeds from common share purchase warrant exercises			399				8,440
Proceeds from stock option exercises			2,595				16,240
Excess tax benefit related to equity-based incentive program			161				3,888
Proceeds from issuance of short-term debt			3,658				—
Proceeds from issuance of long-term debt			25,030				330
Repayment of long-term debt and capital lease obligations			(9,387	)			(6,225	)
Net cash (used in)/provided by financing activities			(37,196	)			17,494
Effect of exchange rate changes on cash and cash equivalents			(25,421	)			21,222
Increase in cash and cash equivalents			260,380				249,510
Cash and cash equivalents at beginning of year			1,048,544				610,887
Cash and cash equivalents at end of period		$	1,308,924			$	860,397

See notes to condensed consolidated financial statements.

FOSTER WHEELER LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands of dollars, except share data and per share amounts)

(unaudited)

1. Summary of Significant Accounting Policies

      Basis of Presentation — The accompanying condensed consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments only consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year.

     The financial statements and notes are presented in accordance with the requirements of Form 10-Q and do not contain certain information included in our annual report on Form 10-K for the fiscal year ended December 28, 2007 (“2007 Form 10-K”), filed with the Securities and Exchange Commission on February 26, 2008. The condensed consolidated balance sheet as of December 28, 2007 was derived from the audited financial statements included in our 2007 Form 10-K, but does not include all the disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements. A summary of our significant accounting policies is presented below.

      Principles of Consolidation — The condensed consolidated financial statements include the accounts of Foster Wheeler Ltd. and all significant domestic and foreign subsidiaries as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated.

     Our fiscal year is the 52- or 53-week annual accounting period ending the last Friday in December for domestic operations and December 31 for foreign operations. There were 13 weeks in the third quarter in both fiscal years 2008 and 2007.

      Capital Alterations — On January 8, 2008, our shareholders approved an increase in our authorized share capital at a special general meeting of common shareholders. The increase in authorized share capital was necessary in order to effect a two-for-one stock split of our common shares which was approved by our Board of Directors on November 6, 2007. The stock split was effected on January 22, 2008 in the form of a stock dividend to common shareholders of record at the close of business on January 8, 2008 in the ratio of one additional Foster Wheeler Ltd. common share in respect of each common share outstanding. As a result, all references to share capital, the number of shares, stock options, restricted awards, per share amounts, cash dividends, and any other reference to shares in the condensed consolidated financial statements, unless otherwise noted, have been adjusted to reflect the stock split on a retroactive basis.

      Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. Significant estimates are used when accounting for long-term contracts including estimates of total costs and customer and vendor claims, employee benefit plan obligations, share-based compensation plans, uncertain tax positions and deferred taxes, and asbestos liabilities and expected recoveries, among others.

      Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term fixed-price contracts are recorded under the percentage-of-completion method. Progress towards completion is measured using physical completion of individual tasks for all contracts with a value of $5,000 or greater. Progress toward completion of fixed-priced contracts with a value less than $5,000 is measured using the cost-to-cost method.

     Revenues and profits on cost-reimbursable contracts are recorded as the services are rendered based on the estimated revenue per man-hour, including any incentives assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as revenue on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs.

     Contracts in process are stated at cost, increased for profits recorded on the completed effort or decreased for estimated losses, less billings to the customer and progress payments on uncompleted contracts.

     We have numerous contracts that are in various stages of completion. Such contracts require estimates to determine the extent of revenue and profit recognition. These estimates may be revised from time to time as additional information becomes available. In accordance with the accounting and disclosure requirements of the American Institute of Certified Public Accountants Statement of Position (“SOP”) 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts” and Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3,” we review all of our material contracts monthly and revise our estimates as appropriate. These estimate revisions, which include both increases and decreases in estimated profit, result from events such as earning project incentive bonuses or the incurrence or forecasted incurrence of contractual liquidated damages for performance or schedule issues, providing services and purchasing third-party materials and equipment at costs differing from those previously estimated and testing of completed facilities which, in turn, eliminates or confirms completion and warranty-related costs. Project incentives are recognized when it is probable they will be earned. Project incentives are frequently tied to cost, schedule and/or safety targets and, therefore, tend to be earned late in a project’s life cycle. There were 26 and 38 separate projects that had final estimated contract profit revisions whose impact on contract profit exceeded $1,000 during the first fiscal nine months of 2008 and 2007, respectively. The changes in final estimated contract profits resulted in net increases to contract profit of $9,120 and $26,070 during the fiscal quarter and nine months ended September 26, 2008, respectively. The changes in final estimated contract profits resulted in a net increase to contract profit of $17,980 and $34,120 during the fiscal quarter and nine months ended September 28, 2007, respectively. The impact on contract profit is measured as of the beginning of the quarterly and year-to-date periods and represents the incremental contract profit or loss that would have been recorded in prior periods had we been able to recognize in those periods the impact of the current period changes in final estimated profits. Please see Note 11 for further information related to changes in final estimated profits.

     Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, disputed or unapproved change orders as to both scope and price or other causes of unanticipated additional costs. We record claims in accordance with paragraph 65 of SOP 81-1, which states that recognition of amounts as additional contract revenue related to claims is appropriate only if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. Under SOP 81-1, those two requirements are satisfied by the existence of all of the following conditions: the contract or other evidence provides a legal basis for the claim; additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in our performance; costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and the evidence supporting the claim is objective and verifiable. If such requirements are met, revenue from a claim may be recorded only to the extent that contract costs relating to the claim have been incurred. Costs attributable to claims are treated as costs of contract performance as incurred and are recorded in contracts in process. As of September 26, 2008, our condensed consolidated financial statements assumed recovery of commercial claims of $27,400, of which $800 has yet to be expended. As of December 28, 2007, our condensed consolidated financial statements assumed recovery of commercial claims of $22,200, of which $3,700 was yet to be expended.

     In certain circumstances, we may defer pre-contract costs when it is probable that these costs will be recovered under a future contract. Such deferred costs would then be included in contract costs upon execution of the anticipated contract. We had no material deferred pre-contract costs as of September 26, 2008 or December 28, 2007.

     Certain special-purpose subsidiaries in our global power business group are reimbursed by customers for their costs, including amounts related to principal repayments of non-recourse project debt, for building and operating certain facilities over the lives of the corresponding service contracts.

      Cash and Cash Equivalents — Cash and cash equivalents include highly liquid short-term investments with original maturities of three months or less. Cash and cash equivalents of $1,003,382 and $800,036 were maintained by our foreign subsidiaries as of September 26, 2008 and December 28, 2007, respectively. These subsidiaries require a portion of these funds to support their liquidity and working capital needs, as well as to comply with required minimum capitalization and contractual restrictions. Accordingly, a portion of these funds may not be readily available for repatriation to U.S. entities.

      Trade Accounts Receivable — Trade accounts receivable represent amounts billed to customers. In accordance with terms under our long-term contracts, our customers may withhold certain percentages of such billings until completion and acceptance of the work performed. Final payments of all such amounts withheld might not be received within a one-year period. In conformity with industry practice, however, the full amount of accounts receivable, including such amounts withheld, are included in current assets on the condensed consolidated balance sheet.

     Trade accounts receivable are continually evaluated for collectibility. Provisions are established on a project-specific basis when there is an issue associated with the client’s ability to make payments or there are circumstances where the client is not making payment due to contractual issues.

      Contracts in Process and Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts — Under long-term contracts, amounts recorded in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts may not be realized or paid, respectively, within a one-year period. In conformity with industry practice, however, the full amount of contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts is included in current assets and current liabilities on the condensed consolidated balance sheet, respectively.

      Land, Buildings and Equipment — Depreciation is computed on a straight-line basis using estimated lives ranging from 10 to 50 years for buildings and from 3 to 35 years for equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses, if any, are reflected in earnings.

      Investments in and Advances to Unconsolidated Affiliates — We use the equity method of accounting for affiliates in which our investment ownership ranges from 20% to 50% unless significant economic or governance considerations indicate that we are unable to exert significant influence in which case the cost method is used. The equity method is also used for affiliates in which our investment ownership is greater than 50% but we do not have a controlling interest. Currently, all of our investments in affiliates in which our investment ownership is 20% or greater and that are not consolidated are recorded using the equity method. Affiliates in which our investment ownership is less than 20% are carried at cost.

      Intangible Assets — Intangible assets consist principally of goodwill, trademarks and patents. Goodwill is allocated to our reporting units on a relative fair value basis at the time of the original purchase price allocation. Patents and trademarks are amortized on a straight-line basis over periods of 3 to 40 years. Customer relationships and backlog are amortized on a straight-line basis over periods of 1 to 15 years.

     We test goodwill for impairment at the reporting unit level as defined in SFAS No. 142, “Goodwill and Other Intangible Assets.” This test is a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value, which is estimated based on discounted future cash flows, exceeds the carrying amount, goodwill is not considered impaired. If the carrying amount exceeds the fair value, the second step must be performed to measure the amount of the impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. In the fourth quarter of each fiscal year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in earnings. An impairment loss would be recognized in an amount equal to the excess of the carrying amount of the goodwill over the implied fair value of the goodwill. SFAS No. 142 also requires that intangible assets with determinable useful lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

     In July 2008, we acquired the majority of the assets and work force of an engineering design company that has an engineering center in Kolkata, India. In conjunction with the acquisition, we recorded $6,610 of goodwill and $330 of identifiable intangible assets. Please see Note 2 for further information related to this acquisition.

     In February 2008, we acquired a biopharmaceutical engineering company that is based in Philadelphia, Pennsylvania. In conjunction with the acquisition, we recorded $5,523 of goodwill and $3,600 of identifiable intangible assets. Please see Note 2 for further information related to this acquisition.

     We had total net goodwill of $65,060 and $53,345 as of September 26, 2008 and December 28, 2007, respectively. Of the $65,060 of goodwill as of September 26, 2008, $53,016 is related to our global power business group and $12,044 is related to our global engineering and construction group. In fiscal year 2007, the fair value of all reporting units exceeded the carrying amounts except for a domestic reporting unit, where a goodwill impairment charge of $2,401 was recorded related to winding down of certain operations.

     We had total unamortized identifiable intangible assets of $61,705 and $61,190 as of September 26, 2008 and December 28, 2007, respectively. Of the $61,705 of identifiable intangible assets as of September 26, 2008, $58,213 is related to our global power business group and $3,492 is related to our global engineering and construction business group. The following table details amounts relating to our identifiable intangible assets:

		September 26, 2008												December 28, 2007
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Patents		$	39,390			$	(22,538	)		$	16,852			$	39,375			$	(21,026	)		$	18,349
Trademarks			63,668				(22,065	)			41,603				63,344				(20,503	)			42,841
Customer relationships and backlog			3,630				(380	)			3,250				—				—				—
Total		$	106,688			$	(44,983	)		$	61,705			$	102,719			$	(41,529	)		$	61,190

     Amortization expense related to identifiable intangible assets, which is recorded within cost of operating revenues on the condensed consolidated statement of operations, totaled $1,157 and $3,454 for the fiscal quarter and nine months ended September 26, 2008, respectively. Amortization expense totaled $912 and $2,720 for the fiscal quarter and nine months ended September 28, 2007, respectively. Amortization expense is expected to approximate $4,600 each year in the next five years.

      Income Taxes — Deferred tax assets/liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

     We do not make a provision for U.S. federal income taxes on foreign subsidiary earnings if we expect such earnings to be permanently reinvested outside the United States.

     We recognize interest accrued on the unrecognized tax benefits in interest expense and penalties on the unrecognized tax benefits in other deductions, net on our consolidated statement of operations.

      Foreign Currency — The functional currency of our foreign operations is the local currency of their country of domicile. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at period-end exchange rates with the resulting translation adjustment recorded as a separate component within accumulated other comprehensive loss. Income and expense accounts and cash flows are translated at weighted-average exchange rates for the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income, net and other deductions, net, based on the net transaction gain or loss during each of the fiscal nine months ended September 26, 2008 and September 28, 2007.

     We maintain a foreign currency risk-management strategy that uses foreign currency forward contracts to protect us from unanticipated fluctuations in cash flows that may arise from volatility in currency exchange rates between the functional currencies of our subsidiaries and the foreign currencies in which some of our operating purchases and sales are denominated. We utilize these contracts solely to hedge specific foreign currency exposures, whether or not they qualify for hedge accounting under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” During the fiscal quarters and nine months ended September 26, 2008 and September 28, 2007, none of the contracts met the requirements for hedge accounting under SFAS No. 133. Accordingly, we recorded pretax foreign exchange losses of $(2,313) and $(1,326) for the fiscal quarter and nine months ended September 26, 2008, respectively. Similarly, we recorded a pretax foreign exchange gain/(loss) of $(90) and $576 for the fiscal quarter and nine months ended September 28, 2007, respectively. These amounts were recorded in the following line items on the condensed consolidated statement of operations for the periods indicated:

		Fiscal Quarters Ended								Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Cost of operating revenues		$	(2,550	)		$	(54	)		$	(1,239	)		$	674
Other income/(deductions)			237				(36	)			(87	)			(98	)
Pretax gain/(loss)		$	(2,313	)		$	(90	)		$	(1,326	)		$	576

     The mark-to-market adjustments on foreign exchange contracts for these unrealized gains or losses are recorded in either contracts in process or billings in excess of costs and estimated earnings on uncompleted contracts on the condensed consolidated balance sheet.

     During the fiscal nine months ended September 26, 2008 and September 28, 2007, we included net cash inflows on the settlement of derivatives of $6,353 and $4,280, respectively, within the “net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts,” a component of cash flows from operating activities in the condensed consolidated statement of cash flows.

      Interest Rate Risk — We use interest rate swap contracts to manage interest rate risk associated with some of our variable rate special-purpose limited recourse project debt. Certain of our affiliates in which we have an equity interest also use interest rate swap contracts to manage interest rate risk associated with their limited recourse project debt. Upon entering into the swap contracts, we designate the interest rate swaps as cash flow hedges in accordance with SFAS No. 133. We assess at inception, and on an ongoing basis, whether the interest rate swaps are highly effective in offsetting changes in the cash flows of the project debt. Consequently, we record the fair value of our interest rate swap contracts in our condensed consolidated balance sheet at each balance sheet date. Changes in the fair value of the interest rate swap contracts are recorded as a component of comprehensive income on our condensed consolidated statement of comprehensive income. As of September 26, 2008 and December 28, 2007, we had net gains on the swap contracts of $1,667 and $1,673, respectively, which were recorded net of tax provisions of $632 and $635, respectively, and were included in accumulated other comprehensive loss on the condensed consolidated balance sheet.

      Retirement of Common Shares under Common Share Repurchase Program — On September 12, 2008, we announced a share repurchase program pursuant to which our Board of Directors authorized the repurchase of up to $750,000 of our outstanding common shares. Any repurchases will be made at our discretion in the open market or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements and will depend on a variety of factors, including market conditions, share price and other factors. The program does not obligate us to acquire any particular number of common shares. The program has no expiration date and may be suspended or discontinued at any time. Any repurchases made pursuant to the share repurchase program will be funded using our cash on hand.

     All common shares acquired under our common share repurchase program are immediately retired upon purchase. The common share value, on the condensed consolidated balance sheet, is reduced for the par value of the retired common shares. Paid-in capital, on the condensed consolidated balance sheet, is reduced for the excess of fair value and related fees paid above par value for the common shares acquired.

     Common shares retired under the common share repurchase program reduce the weighted-average number of common shares outstanding during the reporting period when calculating earnings per common share, as described below.

      Earnings per Common Share — Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period, excluding non-vested restricted shares of 82,980 and 165,960 as of September 26, 2008 and September 28, 2007, respectively. Restricted shares and restricted share units (collectively, “restricted awards”) are included in the weighted-average number of common shares outstanding when such restricted awards vest.

     Diluted earnings per common share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options, warrants to purchase common shares and the non-vested portion of restricted awards to the extent such securities are dilutive.

     In profitable periods, outstanding stock options and warrants have a dilutive effect under the treasury stock method when the average common share price for the period exceeds the assumed proceeds from the exercise of the warrant or option. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the condensed consolidated statement of operations, and any tax benefits that would be recorded in paid-in capital when the option or warrant is exercised. Under the treasury stock method, the assumed proceeds are assumed to be used to repurchase common shares in the current period. The dilutive impact of the non-vested portion of restricted awards is determined using the treasury stock method, but the proceeds include only the unrecognized compensation cost and tax benefits as assumed proceeds.

     The computations of basic and diluted earnings per common share were as follows:

		Fiscal Quarters Ended								Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Basic earnings per common share:
Net income		$	127,920			$	129,101			$	426,738			$	315,776
Weighted-average number of common shares outstanding for basic earnings per common share			144,030,570				142,517,528				143,980,815				141,034,618
Basic earnings per common share		$	0.89			$	0.91			$	2.96			$	2.24
Diluted earnings per common share:
Net income		$	127,920			$	129,101			$	426,738			$	315,776
Weighted-average number of common shares outstanding for basic earnings per common share			144,030,570				142,517,528				143,980,815				141,034,618
Effect of dilutive securities:
Options to purchase common shares			451,516				672,578				560,480				1,153,288
Warrants to purchase common shares			558,564				1,640,534				589,065				2,134,916
Non-vested portion of restricted awards			158,946				261,824				219,571				243,272
Weighted-average number of common shares outstanding for diluted earnings per common share			145,199,596				145,092,464				145,349,931				144,566,094
Diluted earnings per common share		$	0.88			$	0.89			$	2.94			$	2.18

     The following table summarizes the common share equivalent of potentially dilutive securities that have been excluded from the denominator used in the calculation of diluted earnings per common share due to their antidilutive effect:

		Fiscal Quarters Ended								Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Common shares issuable under outstanding options not included in the computation of diluted earnings per common share because the assumed proceeds were greater than the average common share price for the period			526,600				165,736				478,221				357,756

      Share-Based Compensation Plans — Our share-based compensation plans are accounted for in accordance with the provisions of SFAS No. 123R, “Share-Based Payment.” We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model. We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

	•		Expected volatility — we estimate the volatility of our common share price at the date of grant using historical volatility adjusted for periods of unusual stock price activity.
	•		Expected term — we estimate the expected term of options granted to our chief executive officer based on a combination of vesting schedules, contractual life of the option, past history and estimates of future exercise behavior patterns as outlined in SFAS No. 123R. For grants to other employees and the remaining directors, we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.”
	•		Risk-free interest rate — we estimate the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.
	•		Dividends — we use an expected dividend yield of zero because we have not declared or paid a cash dividend since July 2001 and we do not have any plans to declare or pay any cash dividends.

     We used the following weighted-average assumptions to estimate the fair value of the options granted for the periods indicated:

		Fiscal Nine Months Ended
		September 26,		September 28,
		2008		2007
Expected volatility		45.99%		42.59%
Expected term		3.6 years		3.2 years
Risk-free interest rate		2.16%		4.47%
Expected dividend yield		0%		0%

     We estimate the fair value of restricted awards using the market price of our common shares on the date of grant. We then recognize the fair value of each restricted award as compensation cost ratably using the straight-line attribution method over the service period (generally the vesting period).

     We estimate pre-vesting forfeitures at the time of grant using a combination of historical data and demographic characteristics, and we revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We record share-based compensation expense only for those awards that are expected to vest.

      Recent Accounting Developments — In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The standard is effective for financial assets and liabilities, as well as for any other assets and liabilities that are required to be measured at fair value on a recurring basis, in financial statements for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued a partial one-year deferral of SFAS No. 157 for nonfinancial assets and liabilities that are only subject to fair value measurement on a nonrecurring basis. We have elected to defer the application of SFAS No. 157 for our nonfinancial assets and liabilities measured at fair value on a nonrecurring basis until the fiscal year beginning December 27, 2008, and are in the process of assessing its impact on our financial position and results of operations related to such assets and liabilities. Our financial assets and liabilities that are recorded at fair value consist primarily of the assets or liabilities arising from derivative financial instruments. The adoption of SFAS No. 157 did not have a material effect on our financial position or results of operations.

     SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

     SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by SFAS No. 157 are as follows:

•

Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

	•		Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which may include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or model-derived valuations whose inputs are observable or whose significant value drivers are observable, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 2 instruments are valued based on pricing inputs as of the reporting date.
	•		Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

     We utilize foreign currency forward contracts to protect us from unanticipated fluctuations in cash flows that may arise from volatility in currency exchange rates. We also use interest rate swap contracts to manage interest rate risk associated with some of our variable rate debt. The foreign currency forward contracts and interest rate swap contracts are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 2.

     The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 26, 2008:

		September 26,
		2008
Assets:
Foreign currency forward contracts		$	10,784
Interest rate swap contracts			2,744
Liabilities:
Foreign currency forward contracts			8,033
Interest rate swap contracts			445

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R replaces SFAS No. 141, “Business Combinations” and changes the accounting treatment for business acquisitions. SFAS No. 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. Most of the provisions of SFAS No. 141R apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted. We are currently assessing the impact that SFAS No. 141R may have on our financial position, results of operations and cash flows.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 amends the accounting and reporting standards for the noncontrolling interest in a subsidiary (often referred to as “minority interest”) and for the deconsolidation of a subsidiary. Under SFAS No. 160, the noncontrolling interest in a subsidiary is reported as equity in the parent company’s consolidated financial statements. SFAS No. 160 also requires that the parent company’s consolidated statement of operations include both the parent and noncontrolling interest share of the subsidiary’s statement of operations. Formerly, the noncontrolling interest share was shown as a reduction of income on the parent’s consolidated statement of operations. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS No. 160 is to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied; however, presentation and disclosure requirements shall be applied retrospectively for all periods presented. We do not believe that SFAS No. 160 will have a significant impact on our financial position, results of operations and cash flows.

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 requires enhanced disclosures to enable investors to better understand the effects of derivative instruments and hedging activities on an entity’s financial position, financial performance and cash flows. SFAS No. 161 changes the disclosure requirements about the location and amounts of derivative instruments in an entity’s financial statements, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect the company’s financial position, financial performance and cash flows. Additionally, SFAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS No. 161 also requires more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, SFAS No. 161 requires cross-referencing within the footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently assessing the impact that SFAS No. 161 may have on our financial statement disclosures.

2. Business Combinations

     In July 2008, we acquired the majority of the assets and work force of an engineering design company for $6,500, plus up to $1,500 to be paid if certain performance milestones are met over the following two years. This company, which has an engineering center in Kolkata, India, provides engineering services to the petrochemical, refining, upstream oil and gas, and power industries. The purchase price allocation and pro forma information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global engineering and construction business segment.

     In February 2008, we acquired all of the outstanding capital stock of a biopharmaceutical engineering company, based in Philadelphia, Pennsylvania, for $8,545 plus up to $3,638 to be paid over the following three years if certain conditions are met, plus up to an additional $8,700 to be paid if certain performance milestones are met over the following three years. This company provides design, engineering, manufacture, installation, validation and startup/commissioning services to the life sciences industry. The purchase price allocation and pro forma information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global engineering and construction business segment.

     In February 2007, we purchased the stock of a Finnish company that owns patented coal flow measuring technology. The purchase price, net of cash acquired was € 1,112 (approximately $1,473 at the exchange rate in effect at the time of the acquisition). The purchase price allocation and pro forma financial information for this acquisition were not material to our condensed consolidated financial statements. This company’s financial results are included within our global power business segment.

3.

Equity Interests

     We own a noncontrolling equity interest in two electric power generation projects, one waste-to-energy project and one wind farm project in Italy and in a refinery/electric power generation project in Chile. We also own a 50% noncontrolling equity interest in an Italian project which generates earnings from royalty payments linked to the price of natural gas. The two electric power generation projects in Italy are each 42% owned by us, the waste-to-energy project is 39% owned by us and the wind farm project is 50% owned by us. The project in Chile is 85% owned by us; however, we do not have a controlling interest in the Chilean project as a result of participating rights held by the minority shareholder. We account for these investments in Italy and Chile under the equity method. The following is summarized financial information for these entities (each as a whole) in which we have an equity interest:

		September 26, 2008								December 28, 2007
		Italian				Chilean				Italian				Chilean
		Projects				Project				Projects				Project
Balance Sheet Data:
Current assets		$	281,616			$	49,207			$	294,482			$	49,353
Other assets (primarily buildings and equipment)			657,868				139,411				656,796				146,665
Current liabilities			32,304				21,140				72,009				21,044
Other liabilities (primarily long-term debt)			586,506				70,950				576,545				81,696
Net assets			320,674				96,528				302,724				93,278

		Fiscal Quarters Ended
		September 26, 2008								September 28, 2007
		Italian				Chilean				Italian				Chilean
		Projects				Project				Projects				Project
Income Statement Data:
Total revenues		$	126,499			$	16,385			$	102,776			$	27,881
Gross earnings			29,373				10,590				40,982				19,774
Income before income taxes			15,287				9,017				37,880				18,193
Net earnings/(loss)			(5,570	)			7,485				23,362				18,193

		Fiscal Nine Months Ended
		September 26, 2008								September 28, 2007
		Italian				Chilean				Italian				Chilean
		Projects				Project				Projects				Project
Income Statement Data:
Total revenues		$	357,244			$	68,459			$	247,517			$	51,528
Gross earnings			100,725				40,967				70,513				30,420
Income before income taxes			61,759				37,244				61,947				25,242
Net earnings			24,225				30,913				37,973				25,242

     Our share of equity in the net earnings of these partially-owned affiliates, which is recorded within other income, net on the condensed consolidated statement of operations, totaled $2,202 and $27,082 for the fiscal quarter and nine months ended September 26, 2008, respectively. Similarly, our share of equity in the net earnings of these partially-owned affiliates totaled $18,935 and $29,503 for the fiscal quarter and nine months ended September 28, 2007, respectively.

     Our investment in these equity affiliates, which is recorded within investments in and advances to unconsolidated affiliates on the condensed consolidated balance sheet, totaled $200,726 and $190,887 as of September 26, 2008 and December 28, 2007, respectively. Distributions of $24,452 and $10,946 were received during the fiscal nine months ended September 26, 2008 and September 28, 2007, respectively.

     We have guaranteed certain performance obligations of the Chilean project. We have a contingent obligation, which is measured annually based on the operating results of the Chilean project for the preceding year. We did not have a current payment obligation under this guarantee as of December 28, 2007.

     We also have guaranteed the obligations of our subsidiary under the Chilean project’s operations and maintenance agreement. The guarantee is limited to $20,000 over the life of the operations and maintenance agreement, which extends through 2016. No amounts have ever been paid under the guarantee.

     In addition, we have provided a $10,000 debt service reserve letter of credit to cover debt service payments in the event that the Chilean project does not generate sufficient cash flow to make such payments. We are required to maintain the debt service reserve letter of credit during the term of the Chilean project’s debt, which matures in 2014. As of September 26, 2008, no amounts have been drawn under this letter of credit.

     Under the Chilean project’s operations and maintenance agreement, our subsidiary provides services for the management, operation and maintenance of the refinery/electric power generation facility. Our fees for these services were $2,328 and $6,984 for the fiscal quarter and nine months ended September 26, 2008, respectively, and were $2,077 and $6,231 for the fiscal quarter and nine months ended September 28, 2007, respectively. Our fees for these services were recorded in operating revenues on our condensed consolidated statement of operations. We had a receivable from our partially-owned affiliate in Chile of $9,300 and $6,168 recorded in trade accounts and notes receivable on our condensed consolidated balance sheet as of September 26, 2008 and December 28, 2007, respectively.

4. Long-term Debt

     The following table shows the components of our long-term debt:

		September 26, 2008												December 28, 2007
		Current				Long-term				Total				Current				Long-term				Total
Capital Lease Obligations		$	1,376			$	65,940			$	67,316			$	1,318			$	67,095			$	68,413
Special-Purpose Limited Recourse Project Debt:
Camden County Energy Recovery Associates			9,648				31,779				41,427				9,648				31,779				41,427
FW Power S.r.L.			—				68,565				68,565				—				45,041				45,041
Energia Holdings, LLC			4,675				16,426				21,101				4,144				21,101				25,245
Subordinated Robbins Facility Exit Funding Obligations:
1999C Bonds at 7.25% interest, due October 15, 2009			18				19				37				18				19				37
1999C Bonds at 7.25% interest, due October 15, 2024			—				20,491				20,491				—				20,491				20,491
1999D Accretion Bonds at 7% interest, due October 15, 2009			—				301				301				—				286				286
Intermediate Term Loans in China at 7.02% interest			—				—				—				4,107				—				4,107
Term Loan in China at 6.57% interest, due December 28, 2008			3,650				—				3,650				—				—				—
Other			123				61				184				133				166				299
Total		$	19,490			$	203,582			$	223,072			$	19,368			$	185,978			$	205,346

      Domestic Senior Credit Agreement — In October 2006, we executed a five-year domestic senior credit agreement to be used for our domestic and foreign operations. The senior credit agreement, as amended in May 2007, provides for a facility of $450,000, and includes a provision which permits future incremental increases of up to $100,000 in total availability under the facility. We can issue up to $450,000 under the letter of credit facility. A portion of the letters of credit issued under the domestic senior credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in the credit rating of the domestic senior credit agreement as reported by Moody’s Investors Service and/or Standard & Poor’s (“S&P”). We also have the option to use up to $100,000 of the $450,000 for revolving borrowings at a rate equal to adjusted LIBOR plus 1.50%, subject also to the performance pricing noted above. As a result of the improvement in our S&P credit rating in March 2007, we have achieved the lowest possible pricing under the performance pricing provisions of our domestic senior credit agreement.

     We had $291,775 and $245,765 of letters of credit outstanding under this agreement as of September 26, 2008 and December 28, 2007, respectively. The letter of credit fees ranged from 1.50% to 1.60% of the outstanding amount, excluding a fronting fee of 0.125% per annum. There were no funded borrowings under this agreement as of September 26, 2008 or December 28, 2007.

     Subsequent to the fiscal quarter and nine months ended September 26, 2008, we and the requisite lenders under our domestic senior credit agreement amended the domestic senior credit agreement, effective September 29, 2008 to allow us to use cash up to $750,000 to repurchase our outstanding common shares and increase the limit of permissible capital expenditures. Please see Note 13 for further information related to the amended domestic senior credit agreement.

     Subsequent to the fiscal quarter and nine months ended September 26, 2008, we acquired $19,208 of our Subordinated Robbins Facility Exit Funding Obligations, 1999C Bonds due October 15, 2024 (“1999C Robbins Bonds”) on October 3, 2008 for $19,016 of cash, plus accrued and unpaid interest to date. Please see Note 13 for further information related to the acquisition of the 1999C Robbins Bonds.

5. Pensions and Other Postretirement Benefits

     We have defined benefit pension plans in the United States, the United Kingdom, France, Canada and Finland, and we have other postretirement benefit plans for health care and life insurance benefits in the United States and Canada.

      Pension Benefits — Our defined benefit pension plans cover certain full-time employees. Under the plans, retirement benefits are primarily a function of both years of service and level of compensation. The components of benefit cost/(income) for our pension plans are as follows:

		Fiscal Quarter Ended September 26, 2008																Fiscal Quarter Ended September 28, 2007
		United				United												United				United
		States				Kingdom				Other				Total				States				Kingdom				Other				Total
Net periodic benefit cost/(income):
Service cost		$	—			$	2,614			$	177			$	2,791			$	—			$	3,541			$	156			$	3,697
Interest cost			4,991				12,197				475				17,663				4,758				11,441				427				16,626
Expected return on plan assets			(6,035	)			(11,976	)			(388	)			(18,399	)			(5,517	)			(12,156	)			(451	)			(18,124	)
Amortization of transition (asset)/obligation			—				(14	)			25				11				—				(15	)			24				9
Amortization of prior service cost			—				1,233				5				1,238				—				1,312				5				1,317
Amortization of net actuarial loss			696				4,105				116				4,917				821				4,337				168				5,326
Total net periodic benefit cost/(income)		$	(348	)		$	8,159			$	410			$	8,221			$	62			$	8,460			$	329			$	8,851
Changes recognized in other comprehensive income:
Amortization of transition asset/(obligation)		$	—			$	14			$	(25	)		$	(11	)		$	—			$	15			$	(24	)		$	(9	)
Amortization of prior service cost			—				(1,233	)			(5	)			(1,238	)			—				(1,312	)			(5	)			(1,317	)
Amortization of net actuarial loss			(696	)			(4,105	)			(116	)			(4,917	)			(821	)			(4,337	)			(168	)			(5,326	)
Total income recognized in other comprehensive income		$	(696	)		$	(5,324	)		$	(146	)		$	(6,166	)		$	(821	)		$	(5,634	)		$	(197	)		$	(6,652	)
		Fiscal Nine Months Ended September 26, 2008																Fiscal Nine Months Ended September 28, 2007
		United				United												United				United
		States				Kingdom				Other				Total				States				Kingdom				Other				Total
Net periodic benefit cost/(income):
Service cost		$	—			$	8,031			$	536			$	8,567			$	—			$	10,449			$	455			$	10,904
Interest cost			14,971				37,500				1,468				53,939				14,274				33,742				1,218				49,234
Expected return on plan assets			(18,106	)			(36,815	)			(1,252	)			(56,173	)			(16,549	)			(35,852	)			(1,281	)			(53,682	)
Amortization of transition (asset)/obligation			—				(43	)			74				31				—				(46	)			67				21
Amortization of prior service cost			—				3,792				15				3,807				—				3,869				14				3,883
Amortization of net actuarial loss			2,090				12,623				345				15,058				2,464				12,965				475				15,904
SFAS No. 87 net periodic benefit cost/(income)			(1,045	)			25,088				1,186				25,229				189				25,127				948				26,264
SFAS No. 88 cost*			—				—				644				644				—				—				—				—
Total net periodic benefit cost/(income)		$	(1,045	)		$	25,088			$	1,830			$	25,873			$	189			$	25,127			$	948			$	26,264
Changes recognized in other comprehensive income:
Amortization of transition asset/(obligation)		$	—			$	43			$	(74	)		$	(31	)		$	—			$	46			$	(67	)		$	(21	)
Amortization of prior service cost			—				(3,792	)			(15	)			(3,807	)			—				(3,869	)			(14	)			(3,883	)
Amortization of net actuarial loss			(2,090	)			(12,623	)			(345	)			(15,058	)			(2,464	)			(12,965	)			(475	)			(15,904	)
Total income recognized in other comprehensive income		$	(2,090	)		$	(16,372	)		$	(434	)		$	(18,896	)		$	(2,464	)		$	(16,788	)		$	(556	)		$	(19,808	)

     The U.S. pension plans, which are frozen to new entrants and additional benefit accruals, and the Canadian, Finnish and French plans are non-contributory. The U.K. plan, which is closed to new entrants, is contributory.

     Based on the funded status at fiscal year-end 2007 and upon our most recent annual valuation report, we do not expect to be required to make any mandatory contributions to our U.S. pension plans in fiscal year 2008. We made mandatory contributions of approximately $24,700 to our foreign pension plans during the fiscal nine months ended September 26, 2008. We expect to make total mandatory contributions of approximately $32,700 to our foreign plans in fiscal year 2008. We may elect to make discretionary contributions to our U.S. and U.K. pension plans during the fiscal fourth quarter of 2008.

      Other Postretirement Benefits — Certain employees in the United States and Canada may become eligible for health care and life insurance benefits (“other postretirement benefits”) if they qualify for and commence normal or early retirement pension benefits as defined in the U.S. and Canadian pension plans while working for us. Additionally, one of our subsidiaries in the United States also has a benefit plan, referred to as the Survivor Income Plan (“SIP”), which provides coverage for an employee’s beneficiary upon the death of the employee. This plan has been closed to new entrants since 1988.

     The components of benefit cost for our other postretirement plans, including the SIP, are as follows:

		Fiscal Quarters Ended								Fiscal Nine Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Net periodic postretirement benefit cost:
Service cost		$	35			$	36			$	106			$	105
Interest cost			1,156				1,191				3,470				3,572
Amortization of prior service credit			(1,165	)			(1,191	)			(3,496	)			(3,571	)
Amortization of net actuarial loss			117				238				350				714
Net periodic postretirement benefit cost		$	143			$	274			$	430			$	820
Changes recognized in other comprehensive income:
Amortization of prior service credit		$	1,165			$	1,191			$	3,496			$	3,571
Amortization of net actuarial loss			(117	)			(238	)			(350	)			(714	)
Total loss recognized in other comprehensive income		$	1,048			$	953			$	3,146			$	2,857

6. Guarantees and Warranties

     We have agreed to indemnify certain third parties relating to businesses and/or assets that we previously owned and sold to such third parties. Such indemnifications relate primarily to potential environmental and tax exposures for activities conducted by us prior to the sale of such businesses and/or assets. It is not possible to predict the maximum potential amount of future payments under these or similar indemnifications due to the conditional nature of the obligations and the unique facts and circumstances involved in each particular indemnification.

		Maximum				Carrying Amount of Liability
		Potential				September 26,				December 28,
		Payment				2008				2007
Environmental indemnifications		No limit				$	8,200			$	6,900
Tax indemnifications		No limit				$	—			$	—