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 30, 2010

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 AG

(Exact name of registrant as specified in its charter)

Switzerland		98-0607469
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
80 Rue de Lausanne
CH 1202 Geneva, Switzerland		1202
(Address of principal executive offices)		(Zip Code)

41 22 741 8000
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark 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: 123,218,303 registered shares (CHF 3.00 par value) were outstanding as of October 22, 2010.

 

 

FOSTER WHEELER AG
INDEX

Part I FINANCIAL INFORMATION			3
Item 1 — Financial Statements (Unaudited):			3
Consolidated Statement of Operations for the Fiscal Quarters and Nine Months Ended September 30, 2010 and 2009			3
Consolidated Balance Sheet as of September 30, 2010 and December 31, 2009			4
Consolidated Statement of Changes in Equity for the Fiscal Nine Months Ended September 30, 2010 and 2009			5
Consolidated Statement of Cash Flows for the Fiscal Nine Months Ended September 30, 2010 and 2009			6
Notes to Consolidated Financial Statements			7
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3 — Quantitative and Qualitative Disclosures about Market Risk			50
Item 4 — Controls and Procedures			50
Part II OTHER INFORMATION			51
Item 1 — Legal Proceedings			51
Item 1A — Risk Factors			51
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			51
Item 3 — Defaults Upon Senior Securities			51
Item 5 — Other Information			51
Item 6 — Exhibits			52
Signatures			53
EX-10.2
EX-10.3
EX-10.4
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands of dollars, except per share amounts)

(unaudited)

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Operating revenues		$	904,709			$	1,216,379			$	2,855,778			$	3,789,703
Cost of operating revenues			764,789				1,022,542				2,395,916				3,213,155
Contract profit			139,920				193,837				459,862				576,548
Selling, general and administrative expenses			73,622				75,881				213,442				214,153
Other income, net			(16,197	)			(10,508	)			(35,948	)			(30,201	)
Other deductions, net			7,394				6,722				27,131				19,707
Interest income			(2,835	)			(2,701	)			(7,924	)			(7,799	)
Interest expense			4,330				4,648				12,925				10,117
Net asbestos-related (gain)/provision			(1,665	)			1,745				(68	)			5,251
Income before income taxes			75,271				118,050				250,304				365,320
Provision for income taxes			18,693				22,061				55,712				67,625
Net income			56,578				95,989				194,592				297,695
Less: Net income attributable to noncontrolling interests			4,858				5,991				11,954				12,630
Net income attributable to Foster Wheeler AG		$	51,720			$	89,998			$	182,638			$	285,065
Earnings per share (see Note 1):
Basic		$	0.41			$	0.71			$	1.44			$	2.26
Diluted		$	0.41			$	0.71			$	1.44			$	2.24

See notes to consolidated financial statements.

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

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

(unaudited)

		September 30,				December 31,
		2010				2009
ASSETS
Current Assets:
Cash and cash equivalents		$	1,040,153			$	997,158
Short-term investments			268				—
Accounts and notes receivable, net:
Trade			493,213				526,525
Other			118,865				117,718
Contracts in process			197,748				219,774
Prepaid, deferred and refundable income taxes			51,384				46,478
Other current assets			37,199				33,902
Total current assets			1,938,830				1,941,555
Land, buildings and equipment, net			371,883				398,132
Restricted cash			32,866				34,905
Notes and accounts receivable — long-term			1,397				1,571
Investments in and advances to unconsolidated affiliates			225,162				228,030
Goodwill			87,883				88,702
Other intangible assets, net			67,541				73,029
Asbestos-related insurance recovery receivable			216,393				244,265
Other assets			85,668				87,781
Deferred tax assets			70,127				89,768
TOTAL ASSETS		$	3,097,750			$	3,187,738
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current Liabilities:
Current installments on long-term debt		$	35,627			$	36,930
Accounts payable			262,694				303,436
Accrued expenses			225,504				280,861
Billings in excess of costs and estimated earnings on uncompleted contracts			633,050				600,725
Income taxes payable			33,227				60,052
Total current liabilities			1,190,102				1,282,004
Long-term debt			159,339				175,510
Deferred tax liabilities			68,013				62,956
Pension, postretirement and other employee benefits			234,215				270,269
Asbestos-related liability			317,191				352,537
Other long-term liabilities			176,433				171,405
Commitments and contingencies
TOTAL LIABILITIES			2,145,293				2,314,681
Temporary Equity:
Non-vested share-based compensation awards subject to redemption			10,291				2,570
TOTAL TEMPORARY EQUITY			10,291				2,570
Equity:
Registered shares:
CHF 3.00 par value; authorized: 190,733,474 shares and 190,649,900 shares, respectively; conditionally authorized: 62,098,354 shares and 62,181,928 shares, respectively; issued: 127,525,517 shares and 127,441,943 shares, respectively; outstanding: 123,212,807 shares and 127,441,943 shares, respectively			329,641				329,402
Paid-in capital			626,948				617,938
Retained earnings			504,819				322,181
Accumulated other comprehensive loss			(463,941	)			(438,004	)
Treasury shares (outstanding: 4,312,710 shares)			(99,182	)			—
TOTAL FOSTER WHEELER AG SHAREHOLDERS’ EQUITY			898,285				831,517
Noncontrolling interests			43,881				38,970
TOTAL EQUITY			942,166				870,487
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY		$	3,097,750			$	3,187,738

See notes to consolidated financial statements.

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands of dollars)

(unaudited)

																														Total Foster
																		Retained Earnings/												Wheeler AG
		Preferred				Common				Registered				Paid-in				(Accumulated				Accumulated Other				Treasury				Shareholders’				Noncontrolling
		Shares				Shares				Shares				Capital				Deficit)				Comprehensive Loss				Shares				Equity				Interests				Total Equity
Fiscal Nine Months Ended September 30, 2009:
Balance at December 26, 2008		$	—			$	1,262			$	—			$	914,063			$	(27,975	)		$	(494,788	)		$	—			$	392,562			$	28,718			$	421,280
Net income			—				—				—				—				285,065				—				—				285,065				12,630				297,695
Other comprehensive income, net of tax:
Foreign currency translation			—				—				—				—				—				31,322				—				31,322				1,212				32,534
Cash flow hedges			—				—				—				—				—				(3,739	)			—				(3,739	)			—				(3,739	)
Pension and other postretirement benefits			—				—				—				—				—				14,789				—				14,789				(6	)			14,783
Comprehensive Income																															327,437				13,836				341,273
Issuance of common shares upon exercise of share purchase warrants			—				—				—				9				—				—				—				9				—				9
Issuance of common shares upon vesting of restricted awards			—				1				—				(1	)			—				—				—				—				—				—
Cancellation of common shares and issuance of registered shares			—				(1,263	)			326,070				(324,807	)			—				—				—				—				—				—
Repurchase and retirement of shares			—				—				—				(28	)			—				—				—				(28	)			—				(28	)
Issuance of registered shares upon conversion of preferred shares			—				—				361				(361	)			—				—				—				—				—				—
Issuance of registered shares upon exercise of stock options			—				—				33				244				—				—				—				277				—				277
Issuance of registered shares upon vesting of restricted awards			—				—				9				(9	)			—				—				—				—				—				—
Issuance of registered shares upon exercise of share purchase warrants			—				—				1,518				955				—				—				—				2,473				—				2,473
Distributions to noncontrolling interests			—				—				—				—				—				—				—				—				(2,171	)			(2,171	)
Share-based compensation expense-stock options and restricted awards			—				—				—				14,183				—				—				—				14,183				—				14,183
Excess tax shortfall related to share-based compensation			—				—				—				(9	)			—				—				—				(9	)			—				(9	)
Balance at September 30, 2009		$	—			$	—			$	327,991			$	604,239			$	257,090			$	(452,416	)		$	—			$	736,904			$	40,383			$	777,287
Fiscal Nine Months Ended September 30, 2010:
Balance at December 31, 2009		$	—			$	—			$	329,402			$	617,938			$	322,181			$	(438,004	)		$	—			$	831,517			$	38,970			$	870,487
Net income			—				—				—				—				182,638				—				—				182,638				11,954				194,592
Other comprehensive income, net of tax:
Foreign currency translation			—				—				—				—				—				(18,694	)			—				(18,694	)			994				(17,700	)
Cash flow hedges			—				—				—				—				—				(5,333	)			—				(5,333	)			—				(5,333	)
Pension and other postretirement benefits			—				—				—				—				—				(1,910	)			—				(1,910	)			(6	)			(1,916	)
Comprehensive Income																															156,701				12,942				169,643
Issuance of registered shares upon exercise of stock options			—				—				235				1,481				—				—				—				1,716				—				1,716
Issuance of registered shares upon vesting of restricted awards			—				—				4				(4	)			—				—				—				—				—				—
Distributions to noncontrolling interests			—				—				—				—				—				—				—				—				(8,031	)			(8,031	)
Share-based compensation expense-stock options and restricted awards			—				—				—				7,531				—				—				—				7,531				—				7,531
Excess tax benefit related to share-based compensation			—				—				—				2				—				—				—				2				—				2
Repurchase of registered shares			—				—				—				—				—				—				(99,182	)			(99,182	)			—				(99,182	)
Balance at September 30, 2010		$	—			$	—			$	329,641			$	626,948			$	504,819			$	(463,941	)		$	(99,182	)		$	898,285			$	43,881			$	942,166

See notes to consolidated financial statements.

FOSTER WHEELER AG AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of dollars)

(unaudited)

		Fiscal Nine Months Ended September 30,
		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	194,592			$	297,695
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization			37,394				32,909
Curtailment net gain on defined benefit pension plans			(19,665	)			—
Net asbestos-related provision			10,286				5,251
Share-based compensation expense-stock options and restricted awards			15,252				15,891
Excess tax (benefit)/shortfall related to share-based compensation			(2	)			9
Deferred income tax provision			16,526				9,477
Loss on sale of assets			252				565
Equity in the net earnings of partially-owned affiliates, net of dividends			(10,998	)			312
Other noncash items			34				5
Changes in assets and liabilities:
Decrease in receivables			12,662				81,590
Net change in contracts in process and billings in excess of costs and estimated earnings on uncompleted contracts			53,994				(110,913	)
Decrease in accounts payable and accrued expenses			(102,335	)			(116,574	)
Net change in other assets and liabilities			(40,425	)			(5,298	)
Net cash provided by operating activities			167,567				210,919
CASH FLOWS FROM INVESTING ACTIVITIES
Payments related to acquisition of businesses, net of cash acquired			(1,971	)			(8,883	)
Change in restricted cash			847				705
Capital expenditures			(14,826	)			(36,680	)
Proceeds from sale of assets			187				903
Return of investment from unconsolidated affiliates			3,232				—
Increase in short-term investments			(240	)			(1,003	)
Net cash used in investing activities			(12,771	)			(44,958	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares			(99,182	)			(28	)
Distributions to noncontrolling interests			(8,031	)			(2,171	)
Proceeds from share purchase warrants exercised			—				2,482
Proceeds from stock options exercised			2,681				277
Excess tax benefit/(shortfall) related to share-based compensation			2				(9	)
Proceeds from issuance of short-term debt			2,197				5,852
Proceeds from issuance of long-term debt			—				1,865
Repayment of debt and capital lease obligations			(10,222	)			(11,963	)
Net cash used in financing activities			(112,555	)			(3,695	)
Effect of exchange rate changes on cash and cash equivalents			754				26,704
INCREASE IN CASH AND CASH EQUIVALENTS			42,995				188,970
Cash and cash equivalents at beginning of year			997,158				773,163
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	1,040,153			$	962,133

See notes to consolidated financial statements.

FOSTER WHEELER AG AND SUBSIDIARIES

NOTES TO 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 fiscal year of Foster Wheeler AG ends on December 31 of each calendar year. Foster Wheeler AG’s fiscal quarters end on the last day of March, June and September.

     Foster Wheeler AG’s consolidated financial results for the fiscal quarter represent the period from July 1 through September 30 for both fiscal years 2010 and 2009 and the fiscal nine months represent the period from January 1, 2010 through September 30, 2010 and December 27, 2008 through September 30, 2009 in fiscal years 2010 and 2009, respectively. Please refer to Note 1 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (“2009 Form 10-K”), filed with the Securities and Exchange Commission on February 25, 2010, for further information on our fiscal year end and related change of country of domicile from Bermuda to Switzerland in February 2009. As part of our change of country of domicile, we cancelled our common shares and issued registered shares. In January 2010, we relocated our principal executive offices to Geneva, Switzerland.

     The consolidated financial results include our U.S. operations, which have a fiscal year that is the 52- or 53- week annual accounting period ending the last Friday in December, and our non-U.S. operations, which have a fiscal year ending December 31.

     The accompanying 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 consolidated financial statements and notes are presented in accordance with the requirements of Form 10-Q and do not contain certain information included in our 2009 Form 10-K. The consolidated balance sheet as of December 31, 2009 was derived from the audited financial statements included in our 2009 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements.

     Certain prior period amounts have been reclassified to conform to the current period presentation.

      Principles of Consolidation — The consolidated financial statements include the accounts of Foster Wheeler AG and all significant U.S. and non-U.S. subsidiaries as well as certain entities in which we have a controlling interest. Intercompany transactions and balances have been eliminated.

     Comprehensive income is comprised of net income, as well as adjustments for foreign currency translation, derivative instruments designated as cash flow hedges and pension and other postretirement benefits. Comprehensive income for Foster Wheeler AG, noncontrolling interests and total equity were as follows:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Comprehensive Income:
Foster Wheeler AG		$	104,504			$	105,615			$	156,701			$	327,437
Noncontrolling interests			5,919				6,810				12,942				13,836
Total		$	110,423			$	112,425			$	169,643			$	341,273

     In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to amend the manner in which entities evaluate whether consolidation is required for variable interest entities (“VIE”). The model for determining which enterprise has a controlling financial interest and is the primary beneficiary of a VIE has changed under the new guidance. Furthermore, the new guidance requires an ongoing reconsideration of the primary beneficiary and also amends the events that trigger a reassessment of whether an entity is a VIE. This revised guidance also requires enhanced disclosures about how a company’s involvement with a VIE affects its financial statements and exposure to risks. This guidance, which became effective for us on January 1, 2010, did not result in any change to the entities previously included in our consolidated financial statements.

      Variable Interest Entities — We sometimes form separate legal entities such as corporations, partnerships and limited liability companies in connection with the execution of a single contract or project. Upon formation of each separate legal entity, we perform an evaluation to determine whether the new entity is a VIE, and whether we are the primary beneficiary of the new entity, which would require us to consolidate the new entity in our financial results. We reassess our initial determination on whether the entity is a VIE and whether we are the primary beneficiary upon the occurrence of certain events as outlined in current accounting guidelines. If the entity is not a VIE, we determine the accounting for the entity under the voting interest accounting guidelines.

     An entity is determined to be a VIE if either (a) the total equity investment is not sufficient for the entity to finance its own activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (such as the ability to make decisions through voting or other rights or the obligation to absorb losses or the right to receive benefits), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb losses of the entity and/or their rights to receive benefits of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

     As of September 30, 2010, we participated in certain entities determined to be VIEs, including a gas-fired cogeneration facility in Martinez, California, a waste-to-energy facility in Camden, New Jersey and a refinery/electric power generation project in Chile. We consolidate the operations of both the Martinez and Camden projects while we record our participation in the Chile based project on the equity method of accounting.

     Please see Note 3 for further information on our participation in these projects.

      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 in accounting for long-term contracts including estimates of total costs, progress toward completion and customer and vendor claims, employee benefit plan obligations and share-based compensation plans. In addition, we also use estimates when accounting for uncertain tax positions and deferred taxes, asbestos liabilities and expected recoveries and when assessing goodwill for impairment, among others.

      Revenue Recognition on Long-Term Contracts — Revenues and profits on long-term contracts are recorded under the percentage-of-completion method.

     Progress towards completion on fixed-price contracts is measured based on physical completion of individual tasks for all contracts with a value of $5,000 or greater. For contracts with a value less than $5,000, progress toward completion is measured based on the ratio of costs incurred to total estimated contract costs (the cost-to-cost method).

     Progress towards completion on cost-reimbursable contracts is measured based on the ratio of quantities expended to total forecasted quantities, typically man-hours. Incentives are also recognized on a percentage-of-completion basis when the realization of an incentive is assessed as probable. We include flow-through costs consisting of materials, equipment or subcontractor services as both operating revenues and cost of operating revenues on cost-reimbursable contracts when we have overall responsibility as the contractor for the engineering specifications and procurement or procurement services for such costs. There is no contract profit impact of flow-through costs as they are included in both operating revenues and cost of operating revenues.

     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.

     At any point, we have numerous contracts in progress, all of which are at various stages of completion. Accounting for revenues and profits on long-term contracts requires estimates of total estimated contract costs and estimates of progress toward completion to determine the extent of revenue and profit recognition. These estimates may be revised as additional information becomes available or as specific project circumstances change. We review all of our material contracts on a monthly basis and revise our estimates as appropriate for developments such as earning project incentive bonuses, incurring or expecting to incur 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 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.

     Changes in estimated final contract revenues and costs can either increase or decrease the final estimated contract profit. In the period in which a change in estimate is recognized, the cumulative impact of that change is recorded based on progress achieved through the period of change. The following table summarizes the number of separate projects that experienced final estimated contract profit revisions with an impact on contract profit in excess of $1 million relating to the revaluation of work performed in prior periods:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Number of separate projects			14				10				35				28
Increase in contract profit from the regular revaluation of final estimated contract profit		$	11,800			$	11,500			$	44,600			$	47,500

     Please see Note 11 for further information related to changes in final estimated contract profit.

     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 as additional contract revenue if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. These 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. Our consolidated financial statements included the following regarding commercial claims:

		September 30,				December 31,
		2010				2009
Assumed recovery of commercial claims		$	17,100			$	18,700
Claims yet to be expended		$	1,700			$	1,200

     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.

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

      Fair Value Measurements — Fair value is defined 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. Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, 820-10 defines fair value, establishes a fair value hierarchy that prioritizes the inputs used to measure fair value and provides guidance on required disclosures about fair value measurements. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

     Our financial assets and liabilities that are recorded at fair value on a recurring basis consist primarily of the assets or liabilities arising from derivative financial instruments and defined benefit pension plan assets. We value our derivative financial instruments using broker quotations, or market transactions in either the listed or over-the-counter markets, resulting in fair value measurements using level 2 inputs as defined under the fair value hierarchy. See Note 8 for further information regarding our derivative financial instruments.

     The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value:

      Financial instruments valued independent of the fair value hierarchy:

•

Cash, Cash Equivalents and Restricted Cash — The carrying value of our cash, cash equivalents and restricted cash approximates fair value because of the demand nature of many of our deposits or short-term maturity of these instruments.

      Financial instruments valued within the fair value hierarchy:

•

Short-term Investments — Short-term investments primarily consist of deposits with maturities in excess of three months but less than one year. Short-term investments are carried at cost plus accrued interest, which approximates fair value.

•

Long-term Debt — We estimate the fair value of our long-term debt (including current installments) based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities using level 2 inputs.

•

Foreign Currency Forward Contracts — We estimate the fair value of foreign currency forward contracts by obtaining quotes from financial institutions or market transactions in either the listed or over-the-counter markets, which we further corroborate with observable market data using level 2 inputs.

•

Interest Rate Swaps — We estimate the fair value of our interest rate swaps based on quotes obtained from financial institutions, which we further corroborate with observable market data using level 2 inputs.

•

Defined Benefit Pension Plan Assets — We estimate the fair value of our defined benefit pension plan assets at each fiscal year end based on quotes obtained from financial institutions, which we further corroborate with observable market data using level 1 and 2 inputs.

      Retirement of Shares under 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 shares and the designation of the repurchased shares for cancellation. Under Swiss law, the shares that we have repurchased under the program since our redomestication to Switzerland in February 2009 must be held as treasury shares until their cancellation is approved by shareholders and registered with the commercial register as described below. Based on the aggregate share repurchases under our program through September 30, 2010, we are authorized to repurchase up to an additional $165,591 of our outstanding 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 shares. The program has no expiration date and may be suspended or discontinued at any time.

     All shares acquired under our share repurchase program since our redomestication to Switzerland in February 2009 are held as treasury shares and are carried at cost on the consolidated balance sheet until the cancellation of the shares has been approved by our shareholders and the cancellation is registered with the commercial register of the Canton of Zug in Switzerland. We expect to seek shareholder approval of the cancellation of all shares repurchased under the program since our redomestication to Switzerland in February 2009 at our 2011 annual general meeting of shareholders. Upon the effectiveness of the cancellation of the shares, the treasury share value, on the consolidated balance sheet, will be reduced for the cost of the cancelled shares, with an offsetting aggregate reduction to the registered share value, on the consolidated balance sheet, for the par value of the cancelled shares and paid-in capital, on the consolidated balance sheet, for the excess of the cost of the treasury shares above par value.

     Once repurchased, treasury shares are no longer considered outstanding, which results in a reduction to the weighted-average number of shares outstanding during the reporting period when calculating earnings per share, as described below.

      Earnings per Share — Basic earnings per share is computed by dividing net income attributable to Foster Wheeler AG by the weighted-average number of shares outstanding during the reporting period, excluding non-vested restricted shares. There were no non-vested restricted shares as of September 30, 2010 and 2009. Restricted shares and restricted share units (collectively, “restricted awards”) are included in the weighted-average number of shares outstanding when such restricted awards vest.

     Diluted earnings per share is computed by dividing net income attributable to Foster Wheeler AG by the combination of the weighted-average number of shares outstanding during the reporting period and the impact of dilutive securities, if any, such as outstanding stock options, warrants to purchase 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 share price for the period exceeds the assumed proceeds from the exercise of the option or warrant. The assumed proceeds include the exercise price, compensation cost, if any, for future service that has not yet been recognized in the 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 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 share were as follows:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Basic earnings per share:
Net income attributable to Foster Wheeler AG		$	51,720			$	89,998			$	182,638			$	285,065
Weighted-average number of shares outstanding for basic earnings per share			125,459,735				126,459,865				126,810,748				126,355,686
Basic earnings per share		$	0.41			$	0.71			$	1.44			$	2.26
Diluted earnings per share:
Net income attributable to Foster Wheeler AG		$	51,720			$	89,998			$	182,638			$	285,065
Weighted-average number of shares outstanding for basic earnings per share			125,459,735				126,459,865				126,810,748				126,355,686
Effect of dilutive securities:
Options to purchase shares			60,199				163,721				148,650				77,022
Warrants to purchase shares			—				440,826				—				465,028
Non-vested portion of restricted awards			191,298				335,442				203,651				171,917
Weighted-average number of shares outstanding for diluted earnings per share			125,711,232				127,399,854				127,163,049				127,069,653
Diluted earnings per share		$	0.41			$	0.71			$	1.44			$	2.24

     The computation of diluted earnings per share excludes potentially dilutive securities when the assumed proceeds would be greater than the average share price for the period. The following table summarizes the share equivalent of potentially dilutive securities that have been excluded from the denominator used in the calculation of diluted earnings per share due to their antidilutive effect:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Options not included in the computation of diluted earnings per share			3,049,055				2,146,939				2,855,367				2,441,968

      Recent Accounting Developments — In July 2010, the FASB issued Accounting Standard Update (“ASU”) No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This ASU requires specific disclosures related to the credit quality of an entity’s financing receivables and its allowance for credit losses. Financing receivable is defined in the ASU as a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in the entity’s statement of financial position. New disclosures are required for finance receivables and the related allowance for credit losses on a disaggregated basis, which the standard defines as portfolio segment and class of financing receivable. ASU No. 2010-20 is effective for financial statements issued for interim or annual periods ending on or after December 15, 2010. We will amend our disclosures accordingly beginning with our consolidated financial statements included in our Annual Report on Form 10-K for fiscal year 2010.

2. Business Combinations

     In October 2009, we acquired substantially all of the assets of the Houston operations of Atlas Engineering, Inc., a privately held company, for a purchase price of approximately $21,000. The purchase price may be increased by an estimated $12,000 for contingent consideration depending on the acquired company’s EBITDA, as defined in the purchase agreement for this transaction, over the first three years after the closing date. The estimated fair value of the contingent consideration liability on our consolidated balance sheet as of September 30, 2010 was $6,625. The acquired company is active in upstream oil and gas engineering services. The purchase price allocation and pro forma information for this acquisition were not material to our consolidated financial statements. This company’s financial results are included within our Global E&C Group business segment.

     In April 2009, we acquired substantially all of the assets of the offshore engineering division of OPE Holdings Ltd., a Canadian company that is listed on the TSX Venture Exchange and which we refer to as OPE, for a purchase price of approximately $8,900. The acquired company is active in upstream oil and gas engineering services. The purchase price allocation and pro forma information for this acquisition were not material to our consolidated financial statements. This company’s financial results are included within our Global E&C Group business segment.

3. Investments

Investment in Unconsolidated Affiliates

     We own a noncontrolling 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 noncontrolling interest in a project based in Italy which generates earnings from royalty payments linked to the price of natural gas. Based on the outstanding equity interests of these entities, we own 42% of each of the two electric power generation projects in Italy, 39% of the waste-to-energy project and 50% of the wind farm project. We have a notional 85% equity interest in the project in Chile; however, we are not the primary beneficiary as a result of participating rights held by the minority shareholder. In determining that we are not the primary beneficiary, we considered the minority shareholder’s right to approve activities of the project that most significantly impact the project’s economic performance which include the right to approve or reject the annual financial (capital and operating) budget and the annual operating plan, the right to approve or reject the appointment of the general manager and senior management, and approval rights with respect to capital expenditures beyond those included in the annual budget.

     On February 27, 2010, an earthquake occurred off the coast of Chile that caused significant damage to our unconsolidated affiliate’s Chile based project. The project’s facility suspended normal operating activities from that date. Subsequent to that date, our unconsolidated affiliate filed a claim with their insurance carrier. During the fiscal third quarter of 2010, a preliminary assessment of the extent of the damage was completed and an estimate of the required cost of repairs was developed. Based on the assessment and cost estimate, as well as correspondence received from the insurance carrier, we expect the property damage insurance recovery to be sufficient to cover the estimated costs of repairing the facility. During the fiscal third quarter of 2010, the insurance carrier also provided a preliminary assessment of the business interruption insurance recovery due to the project, and an advance of insurance proceeds against this assessment. Based on this assessment, we expect the business interruption insurance recovery to substantially compensate the project for the loss of profits while the facility has suspended operations. Normal operating activities are expected to resume by January 1, 2011.

     The summarized financial information presented below for the Chile based project includes an estimated recovery under a property damage insurance policy sufficient to repair the facility and an estimated recovery under a business interruption insurance policy for fixed costs along with an estimated recovery for lost profits for the period from the suspension of the facility’s operations on February 27, 2010 through September 30, 2010. The fiscal quarter ended September 30, 2010 includes approximately $19,700 for the estimated recovery under the business interruption insurance policy included within income before income taxes.

     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) based on where the projects are located:

		September 30, 2010								December 31, 2009
		Italy				Chile				Italy				Chile
Balance Sheet Data:
Current assets		$	266,610			$	56,746			$	325,688			$	46,311
Other assets (primarily buildings and equipment)			597,530				120,182				644,344				127,393
Current liabilities			118,259				44,021				173,593				40,444
Other liabilities (primarily long-term debt)			404,385				50,132				440,942				63,109
Net assets			341,496				82,775				355,497				70,151

		Fiscal Quarter Ended September 30,																Fiscal Nine Months Ended September 30,
		2010								2009								2010								2009
		Italy				Chile				Italy				Chile				Italy				Chile				Italy				Chile
Income Statement Data:
Total revenues		$	76,839			$	14,918			$	84,074			$	13,830			$	275,112			$	32,222			$	283,232			$	47,176
Gross profit			14,340				(1,257	)			28,574				7,813				54,919				2,032				67,823				27,713
Income before income taxes			11,138				16,183				23,640				6,752				42,210				20,577				56,239				23,121
Net earnings			6,579				13,432				11,918				5,605				24,528				17,079				32,972				19,191

     Our investment in these unconsolidated affiliates is recorded within investments in and advances to unconsolidated affiliates on the consolidated balance sheet and our equity in the net earnings of these unconsolidated affiliates is recorded within other income, net on the consolidated statement of operations. Our consolidated financial statements reflect the following amounts related to these unconsolidated affiliates:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Equity in the net earnings of unconsolidated affiliates		$	14,254			$	8,664			$	24,836			$	25,555
Distributions from unconsolidated affiliates										$	17,251			$	25,486

		September 30, 2010				December 31, 2009
Total investment in unconsolidated affiliates		$	203,727			$	215,280

     Our equity earnings for our Chile based project in the fiscal quarter and nine months ended September 30, 2010 were $11,195 and $14,026, respectively, which include our equity interest of the after tax estimated recovery under our Chile based project’s business interruption insurance policy. In accordance with authoritative accounting guidance on business interruption insurance, we were not able to record an estimated recovery for lost profits until substantially all contingencies related to the insurance claim had been resolved, which occurred during the fiscal third quarter of 2010. Accordingly, during the fiscal third quarter of 2010, we recorded an estimated recovery for lost profits for the period from February 27, 2010 through September 30, 2010.

     The two electric power generation projects in Italy, owned by the companies Centro Energia Ferrara (“CEF”) and Centro Energia Teverola (“CET”), in which we hold 41.65% of the shares, have long-term power off-take agreements in place with the Authority for the Energy, which is part of the Italian Economic Development Ministry (“the Ministry”). In September 2010, the Ministry announced an option for certain projects, including those of CEF and CET, to early terminate their long-term power off-take agreements in exchange for a lump-sum payment. The payment is determined by specific calculation under parameters established by the Ministry. The deadline for submitting an acceptance of the proposal was required by October 29, 2010. On October 29, 2010, CEF and CET submitted an application to early terminate their power off-take agreements. The application is subject to approval by the Ministry on or before November 30, 2010.

     In light of the potential early termination of the power off-take agreements, we and our partner in CEF and CET are re-assessing the continued economic viability of the projects. If our application is accepted by the Ministry, and depending on the outcome of our assessment, we and our partner may decide to make changes to the operations of the projects, including the potential shut down of one or both of the projects. At this time, we cannot determine what, if any, impact this will have on the carrying value of our investments in these projects.

     We have guaranteed certain performance obligations of the Chile based project. We do not expect that the earthquake will require us to contribute to this project under our guarantee of the project’s performance obligations.

     We have a contingent obligation, which is measured annually based on the operating results of the Chile based project for the preceding year and is shared equally with our minority interest partner. We did not have a current payment obligation under this guarantee as of December 31, 2009.

     In addition, we have provided a $10,000 debt service reserve letter of credit to cover debt service payments in the event that the Chile based project does not generate sufficient cash flows to make such payments. We are required to maintain the debt service reserve letter of credit during the term of the Chile based project’s debt, which matures in 2014. As of September 30, 2010, no amounts have been drawn under this letter of credit and, based on our current assessment following the earthquake in Chile as described above, we do not anticipate any amounts being drawn under this letter of credit.

     We also have a wholly-owned subsidiary that provides operations and maintenance services to the Chile based project. We continue to provide our services to the project, which since the earthquake in Chile noted above, has been focused on assessing the damage caused by the earthquake and the related repair for the facility to resume normal operating activities. We record the fees for operations and maintenance services in operating revenues on our consolidated statement of operations and the corresponding receivable in trade accounts and notes receivable on our consolidated balance sheet. Our consolidated financial statements include the following balances related to our Chile based project:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Fees for operations and maintenance services		$	2,461			$	2,116			$	7,381			$	6,348

		September 30, 2010				December 31, 2009
Receivable from our unconsolidated affiliate in Chile		$	3,089			$	4,916

     We also have guaranteed the performance obligations of our wholly-owned subsidiary under the Chile based 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.

Other Investments

     We are the majority equity partner and general partner of a gas-fired cogeneration facility in Martinez, California, and we own 100% of the equity in a waste-to-energy facility in Camden, New Jersey (please see Note 12 for further information on the waste-to-energy facility). We have determined that these entities are VIEs and that we are the primary beneficiary of these VIEs since we have the power to direct the activities that most significantly impact the VIE’s performance. These activities include the operations and maintenance of the facility. Accordingly, we consolidate these entities. The aggregate net assets of these entities are presented below.

		September 30,				December 31,
		2010				2009
Balance Sheet Data (excluding intercompany balances):
Current assets		$	22,958			$	14,722
Other assets (primarily buildings and equipment)			100,866				104,552
Current liabilities			34,173				31,014
Other liabilities			785				876
Net assets			88,866				87,384

4. Intangible Assets

     We have tracked accumulated goodwill impairments since December 29, 2001, the first day of fiscal year 2002 and our date of adoption of the accounting guidelines within FASB ASC 350-20. There were no accumulated goodwill impairment losses as of that date. The net carrying amount of goodwill by geographic region for our reporting units in our Global E&C Group and Global Power Group was as follows:

		Global E&C Group								Global Power Group
		September 30,				December 31,				September 30,				December 31,
		2010				2009				2010				2009
U.S.		$	37,407			$	35,436			$	—			$	—
Asia			1,048				1,012				—				—
Europe			—				—				49,428				52,254
Total		$	38,455			$	36,448			$	49,428			$	52,254

     During the fiscal nine months ended September 30, 2010, we made contractual payments totaling approximately $2,000 related to prior acquisitions of businesses in our Global E&C Group’s U.S. operations.

     The following table sets forth amounts relating to our identifiable intangible assets:

		September 30, 2010												December 31, 2009
		Gross								Net				Gross								Net
		Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Amount				Amortization				Amount				Amount				Amortization				Amount
Patents		$	40,370			$	(27,035	)		$	13,335			$	39,304			$	(24,983	)		$	14,321
Trademarks			63,393				(26,792	)			36,601				63,676				(24,487	)			39,189
Customer relationships, pipeline and backlog			22,004				(4,399	)			17,605				21,934				(2,415	)			19,519
Total		$	125,767			$	(58,226	)		$	67,541			$	124,914			$	(51,885	)		$	73,029

     As of September 30, 2010, the net carrying amounts of our identifiable intangible assets were $49,800 for our Global Power Group and $17,741 for our Global E&C Group. Amortization expense related to identifiable intangible assets is recorded within cost of operating revenues on the consolidated statement of operations. The following table details amounts relating to amortization expense:

		Fiscal Quarter Ended September 30,								Fiscal Nine Months Ended September 30,
		2010				2009				2010				2009
Amortization expense		$	1,561			$	1,214			$	4,898			$	3,728

		Fiscal Years
		2010				2011				2012				2013				2014
Approximate full year amortization expense		$	6,700			$	6,500			$	6,300			$	5,600			$	5,300

5. Long-term Debt

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

		September 30, 2010												December 31, 2009
		Current				Long-term				Total				Current				Long-term				Total
Capital Lease Obligations		$	2,227			$	60,051			$	62,278			$	1,492			$	65,327			$	66,819
Special-Purpose Limited Recourse Project Debt:
Camden County Energy Recovery Associates			21,865				—				21,865				21,865				—				21,865
FW Power S.r.l.			7,274				86,785				94,059				7,428				95,661				103,089
Energia Holdings, LLC			2,019				11,220				13,239				3,187				13,239				16,426
Subordinated Robbins Facility Exit Funding Obligations:
1999C Bonds at 7.25% interest, due October 15, 2024			—				1,283				1,283				—				1,283				1,283
Term Loan in China at 4.78% interest, due February 25, 2011			2,242				—				2,242				—				—				—
Term Loan in China at 4.374% interest, due January 8, 2010			—				—				—				2,930				—				2,930
Other			—				—				—				28				—				28
Total		$	35,627			$	159,339			$	194,966			$	36,930			$	175,510			$	212,440
Estimated fair value										$	214,411											$	222,165

      U.S. Senior Secured Credit Agreement — On July 30, 2010, Foster Wheeler AG, Foster Wheeler Ltd., certain of Foster Wheeler Ltd.’s subsidiaries and BNP Paribas, as Administrative Agent, entered into a four-year amendment and restatement of our U.S. senior secured credit agreement, which we entered into in October 2006. The amended and restated U.S. senior secured credit agreement provides for a facility of $450,000, and includes a provision which permits future incremental increases of up to $225,000 in total availability under the facility. The amended and restated U.S. senior secured credit agreement permits us to issue up to $450,000 under the letter of credit facility. Letters of credit issued under the amended and restated U.S. senior secured credit agreement have performance pricing that is decreased (or increased) as a result of improvements (or reductions) in our corporate credit rating as reported by Moody’s Investors Service (“Moody’s”) and/or Standard & Poor’s (“S&P”). We received a corporate credit rating of BBB- as issued by S&P during the fiscal third quarter of 2010, which, under the amended and restated U.S. senior secured credit agreement, reduces our pricing for letters of credit issued under the agreement. Based on the current ratings, letter of credit fees for performance and financial letters of credit issued under the amended and restated U.S. senior secured credit agreement are 1.000% and 2.000% per annum of the outstanding amount, respectively, excluding fronting fees. 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, as defined in the agreement, plus 2.000%, subject also to the performance pricing noted above.

     Unamortized fees and expenses in conjunction with the execution of our amended and restated U.S. senior credit agreement were approximately $4,300 and will be amortized to expense over the four-year term of the agreement, commencing in the fiscal third quarter of 2010. As a result of amending and restating our October 2006 U.S. senior secured credit agreement in July 2010 we incurred a charge in the third fiscal quarter of 2010 of $1,600 related to unamortized fees and expenses paid in conjunction with the October 2006 agreement.

     The assets and/or stock of certain of our U.S. and non-U.S. subsidiaries collateralize our obligations under our amended and restated U.S. senior secured credit agreement. Our amended and restated U.S. senior secured credit agreement contains various customary restrictive covenants that generally limit our ability to, among other things, incur additional indebtedness or guarantees, create liens or other encumbrances on property, sell or transfer certain property and thereafter rent or lease such property for substantially the same purposes as the property sold or transferred, enter into a merger or similar transaction, make investments, declare dividends or make other restricted payments, enter into agreements with affiliates that are not on an arms’ length basis, enter into any agreement that limits our ability to create liens or the ability of a subsidiary to pay dividends, engage in new lines of business, with respect to Foster Wheeler AG, change Foster Wheeler AG’s fiscal year or, with respect to Foster Wheeler AG, Foster Wheeler Ltd. and one of our holding company subsidiaries, directly acquire ownership of the operating assets used to conduct any business. In the event that our corporate credit rating as issued by Moody’s is at least Baa3 and as issued by S&P is at least BBB-, all liens securing our obligations under the amended and restated U.S. senior secured credit agreement will be automatically released and terminated.

     In addition, our amended and restated U.S. senior secured credit agreement contains financial covenants requiring us not to exceed a total leverage ratio, which compares total indebtedness to EBITDA, and to maintain a minimum interest coverage ratio, which compares EBITDA to interest expense. All such terms are defined in our amended and restated U.S. senior secured credit agreement. We must be in compliance with the total leverage ratio at all times, while the interest coverage ratio is measured quarterly. We have been in compliance with all financial covenants and other provisions of our U.S. senior secured credit agreement prior and subsequent to our amendment and restatement of the agreement.

     We had approximately $262,700 and $308,000 of letters of credit outstanding under our U.S. senior secured credit agreement in effect as of September 30, 2010 and December 31, 2009, respectively. The letter of credit fees under the U.S. senior secured credit agreement in effect as of September 30, 2010 and December 31, 2009 ranged from 1.00% to 2.00% and 1.50% to 1.60%, respectively, of the outstanding amount, excluding fronting fees. There were no funded borrowings under this agreement as of September 30, 2010 or December 31, 2009.

     During the fiscal nine months ended September 30, 2010, one of our subsidiaries based in China repaid its outstanding term loan at the scheduled maturity date. Also during the fiscal nine months ended September 30, 2010, the same China based subsidiary entered into a new term loan, as noted in the table above.

6. 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.

Defined Benefit Pension Plans — 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 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. pension plan, which is closed to new entrants and additional benefit accruals, is contributory.

     During the fiscal first nine months of 2010, we capped pensionable salary growth in the U.K. plan to a maximum of 5% and, effective March 31, 2010, we closed the plan for future defined benefit accrual. As a result of the U.K. plan closure, we recognized a curtailment gain in our statement of operations for the fiscal nine months ended September 30, 2010 of approximately £13,300 (approximately $20,086 at the exchange rate in effect at the time of the plan closure).

     Based on the minimum statutory funding requirements for fiscal year 2010, we are not required to make any mandatory contributions to our U.S. pension plans. The following table provides details on fiscal year 2010 contribution activity, including discretionary contributions made to our U.S. and U.K. pension plans:

Contributions made through fiscal nine months ended September 30, 2010:
Mandatory		$	16,300
Discretionary			17,800
Total			34,100
Remaining contributions expected for fiscal year 2010			4,900
Total contributions expected for fiscal year 2010		$	39,000

Other Postretirement Benefit Plans — 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 net periodic benefit cost/(credit) for our defined benefit pension plans and other postretirement benefit plans were as follows:

		Fiscal Quarter Ended September 30, 2010																				Fiscal Quarter Ended September 30, 2009
																		Other																				Other
		Defined Benefit Pension Plans																Postre-				Defined Benefit Pension Plans																Postre-
		United				United												tirement				United				United												tirement
		States				Kingdom				Other				Total				Benefits				States				Kingdom				Other				Total				Benefits
Net periodic benefit cost/(credit):
Service cost		$	—			$	183			$	150			$	333			$	27			$	—			$	1,442			$	166			$	1,608			$	34
Interest cost			4,736				10,150				382				15,268				913				4,949				10,859				467				16,275				1,219
Expected return on plan assets			(5,129	)			(10,050	)			(341	)			(15,520	)			—				(4,280	)			(8,836	)			(313	)			(13,429	)			—
Amortization of transition (asset)/obligation			—				(39	)			26				(13	)			8				—				(14	)			22				8				—
Amortization of prior service cost/(credit)			—				3				5				8				(1,002	)			—				2,049				5				2,054				(1,157	)
Amortization of net actuarial loss			1,742				1,648				152				3,542				7				1,961				3,521				112				5,594				211
(Curtailment gain)/ settlement charges			—				—				—				—				—				—				—				100				100				—
Total net periodic benefit cost/(credit)		$	1,349			$	1,895			$	374			$	3,618			$	(47	)		$	2,630			$	9,021			$	559			$	12,210			$	307
Changes recognized in comprehensive income:
Net actuarial loss		$	—			$	—			$	675			$	675			$	—			$	—			$	—			$	—			$	—			$	—
Amortization of transition asset/(obligation)			—				39				(26	)			13				(8	)			—				14				(22	)			(8	)			—
Amortization of prior service (cost)/credit			—				(3	)			(5	)			(8	)			1,002				—				(2,049	)			(5	)			(2,054	)			1,157
Amortization of net actuarial loss			(1,742	)			(1,648	)			(152	)			(3,542	)			(7	)			(1,961	)			(3,521	)			(112	)			(5,594	)			(211	)
Total recognized in comprehensive income		$	(1,742	)		$	(1,612	)		$	492			$	(2,862	)		$	987			$	(1,961	)		$	(5,556	)		$	(139	)		$	(7,656	)		$	946
		Fiscal Nine Months Ended September 30, 2010																				Fiscal Nine Months Ended September 30, 2009
																		Other																				Other
		Defined Benefit Pension Plans																Postre-				Defined Benefit Pension Plans																Postre-
		United				United												tirement				United				United												tirement
		States				Kingdom				Other				Total				Benefits				States				Kingdom				Other				Total				Benefits
Net periodic benefit cost/(credit):
Service cost		$	—			$	2,069			$	469			$	2,538			$	82			$	—			$	4,050			$	476			$	4,526			$	101
Interest cost			14,210				30,275				1,177				45,662				2,739				14,847				30,599				1,336				46,782				3,656
Expected return on plan assets			(15,386	)			(29,687	)			(1,016	)			(46,089	)			—				(12,839	)			(24,895	)			(879	)			(38,613	)			—
Amortization of transition (asset)/obligation			—				(39	)			74				35				—				—				(37	)			63				26				—
Amortization of prior service cost/(credit)			—				(423	)			15				(408	)			(2,987	)			—				5,775				13				5,788				(3,470	)
Amortization of net actuarial loss			5,225				7,149				432				12,806				36				5,879				9,924				351				16,154				634
(Curtailment gain)/ settlement charges*			—				(20,086	)			422				(19,664	)			—				—				—				291				291				—
Total net periodic benefit cost/(credit)		$	4,049			$	(10,742	)		$	1,573			$	(5,120	)		$	(130	)		$	7,887			$	25,416			$	1,651			$	34,954			$	921
Changes recognized in comprehensive income:
Net actuarial loss		$	—			$	21,130			$	675			$	21,805			$	—			$	—			$	—			$	—			$	—			$	—
Prior service credit			—				(9,054	)			—				(9,054	)			—				—				—				—				—				—
Amortization of transition asset/(obligation)			—				39				(74	)			(35	)			—				—				37				(63	)			(26	)			—
Amortization of prior service (cost)/credit			—				423				(15	)			408				2,987				—				(5,775	)			(13	)			(5,788	)			3,470
Amortization of net actuarial loss			(5,225	)			(7,149	)			(432	)			(12,806	)			(36	)			(5,879	)			(9,924	)			(351	)			(16,154	)			(634	)
Total recognized in comprehensive income		$	(5,225	)		$	5,389			$	154			$	318			$	2,951			$	(5,879	)		$	(15,662	)		$	(427	)		$	(21,968	)		$	2,836