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

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

Commission file number 1-8267

EMCOR Group, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		11-2125338
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
301 Merritt Seven Norwalk, Connecticut		06851-1092
(Address of Principal Executive Offices)		(Zip Code)

(203) 849-7800
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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

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

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

Number of shares of Common Stock outstanding as of the close of business on October 29, 2010: 66,451,792 shares.

 

 

EMCOR Group, Inc.
INDEX

		Page No.
PART I. — Financial Information.
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets — as of September 30, 2010 and December 31, 2009			1
Condensed Consolidated Statements of Operations — three months ended September 30, 2010 and 2009			3
Condensed Consolidated Statements of Operations — nine months ended September 30, 2010 and 2009			4
Condensed Consolidated Statements of Cash Flows — nine months ended September 30, 2010 and 2009			5
Condensed Consolidated Statements of Equity and Comprehensive (Loss) Income — nine months ended September 30, 2010 and 2009			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			20
Item 3. Quantitative and Qualitative Disclosures about Market Risk.			36
Item 4. Controls and Procedures.			37
PART II. — Other Information.
Item 5. Other Information.			37
Item 6. Exhibits.			37
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 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.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

		September 30,				December 31,
		2010				2009
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	641,111			$	726,975
Accounts receivable, net			1,053,355				1,057,171
Costs and estimated earnings in excess of billings on uncompleted contracts			114,592				90,049
Inventories			27,789				34,468
Prepaid expenses and other			52,623				68,702
Total current assets			1,889,470				1,977,365
Investments, notes and other long-term receivables			5,749				19,287
Property, plant and equipment, net			87,478				92,057
Goodwill			388,673				593,628
Identifiable intangible assets, net			223,995				264,522
Other assets			32,139				35,035
Total assets		$	2,627,504			$	2,981,894

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

		September 30,				December 31,
		2010				2009
		(Unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under working capital credit line		$	—			$	—
Current maturities of long-term debt and capital lease obligations			305				45,100
Accounts payable			347,158				379,764
Billings in excess of costs and estimated earnings on uncompleted contracts			500,014				526,241
Accrued payroll and benefits			169,456				215,967
Other accrued expenses and liabilities			141,295				167,533
Total current liabilities			1,158,228				1,334,605
Borrowings under working capital credit line			150,000				—
Long-term debt and capital lease obligations			53				150,251
Other long-term obligations			201,112				270,572
Total liabilities			1,509,393				1,755,428
Equity:
EMCOR Group, Inc. stockholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, zero issued and outstanding			—				—
Common stock, $0.01 par value, 200,000,000 shares authorized, 68,895,671 and 68,675,223 shares issued, respectively			689				687
Capital surplus			424,140				416,267
Accumulated other comprehensive loss			(43,005	)			(52,699	)
Retained earnings			742,600				869,267
Treasury stock, at cost 2,455,875 and 2,487,879 shares, respectively			(16,084	)			(15,451	)
Total EMCOR Group, Inc. stockholders’ equity			1,108,340				1,218,071
Noncontrolling interests			9,771				8,395
Total equity			1,118,111				1,226,466
Total liabilities and equity		$	2,627,504			$	2,981,894

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)

Three months ended September 30,		2010				2009
Revenues		$	1,277,277			$	1,371,985
Cost of sales			1,104,349				1,166,740
Gross profit			172,928				205,245
Selling, general and administrative expenses			119,450				137,895
Restructuring expenses			1,715				90
Impairment loss on goodwill and identifiable intangible assets			226,152				—
Operating (loss) income			(174,389	)			67,260
Interest expense			(3,179	)			(1,947	)
Interest income			642				788
Gain on sale of equity investment			—				—
(Loss) income before income taxes			(176,926	)			66,101
Income tax (benefit) provision			(2,362	)			25,624
Net (loss) income including noncontrolling interests			(174,564	)			40,477
Less: Net income attributable to noncontrolling interests			(1,061	)			(491	)
Net (loss) income attributable to EMCOR Group, Inc.		$	(175,625	)		$	39,986
Basic (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(2.64	)		$	0.61
Diluted (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(2.64	)		$	0.59

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)

Nine months ended September 30,		2010				2009
Revenues		$	3,765,138			$	4,189,291
Cost of sales			3,250,695				3,576,003
Gross profit			514,443				613,288
Selling, general and administrative expenses			362,972				402,664
Restructuring expenses			2,512				4,200
Impairment loss on goodwill and identifiable intangible assets			246,081				—
Operating (loss) income			(97,122	)			206,424
Interest expense			(9,355	)			(5,640	)
Interest income			2,054				3,416
Gain on sale of equity investment			7,900				—
(Loss) income before income taxes			(96,523	)			204,200
Income tax provision			27,068				81,124
Net (loss) income including noncontrolling interests			(123,591	)			123,076
Less: Net income attributable to noncontrolling interests			(3,076	)			(1,503	)
Net (loss) income attributable to EMCOR Group, Inc.		$	(126,667	)		$	121,573
Basic (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(1.91	)		$	1.85
Diluted (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(1.91	)		$	1.81

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)

Nine months ended September 30,		2010				2009
Cash flows from operating activities:
Net (loss) income including noncontrolling interests		$	(123,591	)		$	123,076
Depreciation and amortization			19,020				19,751
Amortization of identifiable intangible assets			11,484				14,400
Deferred income taxes			(7,387	)			4,769
Gain on sale of equity investments			(12,409	)			—
Excess tax benefits from share-based compensation			(304	)			(752	)
Equity income from unconsolidated entities			(594	)			(2,331	)
Non-cash expense for impairment of goodwill and identifiable intangible assets			246,081				—
Other non-cash items			7,286				14,027
Supplemental defined benefit plan contribution			(25,916	)			—
Distributions from unconsolidated entities			866				3,847
Changes in operating assets and liabilities			(145,159	)			95,408
Net cash (used in) provided by operating activities			(30,623	)			272,195
Cash flows from investing activities:
Payments for acquisitions of businesses, identifiable intangible assets and related earn-out agreements			(11,465	)			(15,499	)
Proceeds from sale of equity investments			25,570				—
Proceeds from sale of property, plant and equipment			532				542
Purchase of property, plant and equipment			(13,970	)			(17,247	)
Investments in and advances to unconsolidated entities and joint ventures			(65	)			(8,000	)
Net cash provided by (used in) investing activities			602				(40,204	)
Cash flows from financing activities:
Proceeds from working capital credit line			153,000				—
Repayments of working capital credit line			(3,000	)			—
Repayments of long-term debt and debt issuance costs			(200,824	)			(2,291	)
Repayments of capital lease obligations			(273	)			(971	)
Proceeds from exercise of stock options			1,119				1,109
Issuance of common stock under employee stock purchase plan			1,750				1,580
Distributions to noncontrolling interests			(1,700	)			(550	)
Excess tax benefits from share-based compensation			304				752
Net cash used in financing activities			(49,624	)			(371	)
Effect of exchange rate changes on cash and cash equivalents			(6,219	)			10,742
(Decrease) increase in cash and cash equivalents			(85,864	)			242,362
Cash and cash equivalents at beginning of year			726,975				405,869
Cash and cash equivalents at end of period		$	641,111			$	648,231
Supplemental cash flow information:
Cash paid for:
Interest		$	6,823			$	4,466
Income taxes		$	62,985			$	71,099
Non-cash financing activities:
Capital lease obligations terminated		$	—			$	674
Contingent purchase price accrued		$	1,479			$	1,818

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
AND COMPREHENSIVE (LOSS) INCOME
(In thousands)(Unaudited)

										EMCOR Group, Inc. Stockholders
																		Accumulated
																		other
						Comprehensive				Common				Capital				comprehensive				Retained				Treasury				Noncontrolling
		Total				(loss) income				stock				surplus				(loss) income (1)				earnings				stock				interests
Balance, January 1, 2009		$	1,050,769							$	681			$	397,895			$	(49,318	)		$	708,511			$	(14,424	)		$	7,424
Net income including noncontrolling interests			123,076			$	123,076				—				—				—				121,573				—				1,503
Foreign currency translation adjustments			4,917				4,917				—				—				4,917				—				—				—
Pension adjustment, net of tax benefit of $1.0 million			2,385				2,385				—				—				2,385				—				—				—
Deferred loss on cash flow hedge, net of tax benefit of $0.5 million			(787	)			(787	)			—				—				(787	)			—				—				—
Comprehensive income							129,591
Less : Net income attributable to noncontrolling interests							(1,503	)
Comprehensive income attributable to EMCOR						$	128,088
Treasury stock, at cost (2)			(1,589	)							—				—				—				—				(1,589	)			—
Common stock issued under share-based compensation plans (3)			2,002								5				1,853				—				—				144				—
Common stock issued under employee stock purchase plan			1,580								—				1,580				—				—				—				—
Distributions to noncontrolling interests			(550	)							—				—				—				—				—				(550	)
Share-based compensation expense			4,428								—				4,428				—				—				—				—
Capital contributed by selling shareholders of acquired business (4)			1,572								—				1,572				—				—				—				—
Balance, September 30, 2009		$	1,187,803							$	686			$	407,328			$	(42,803	)		$	830,084			$	(15,869	)		$	8,377
Balance, January 1, 2010		$	1,226,466							$	687			$	416,267			$	(52,699	)		$	869,267			$	(15,451	)		$	8,395
Net (loss) income including noncontrolling interests			(123,591	)		$	(123,591	)			—				—				—				(126,667	)			—				3,076
Foreign currency translation adjustments			1,877				1,877				—				—				1,877				—				—				—
Pension adjustment, net of tax benefit of $2.9 million			7,268				7,268				—				—				7,268				—				—				—
Deferred gain on cash flow hedge, net of tax benefit of $0.4 million			549				549				—				—				549				—				—				—
Comprehensive loss							(113,897	)
Less : Net income attributable to noncontrolling interests							(3,076	)
Comprehensive loss attributable to EMCOR						$	(116,973	)
Treasury stock, at cost (2)			(875	)							—				—				—				—				(875	)			—
Common stock issued under share-based compensation plans (3)			1,321								2				1,077				—				—				242				—
Common stock issued under employee stock purchase plan			1,750								—				1,750				—				—				—				—
Distributions to noncontrolling interests			(1,700	)							—				—				—				—				—				(1,700	)
Share-based compensation expense			5,046								—				5,046				—				—				—				—
Balance, September 30, 2010		$	1,118,111							$	689			$	424,140			$	(43,005	)		$	742,600			$	(16,084	)		$	9,771

See Notes to Condensed Consolidated Financial Statements.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE A Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the interim period reporting requirements of Form 10-Q. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. References to the “Company,” “EMCOR,” “we,” “us,” “our” and words of similar import refer to EMCOR Group, Inc. and its consolidated subsidiaries unless the context indicates otherwise. Readers of this report should refer to the consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of a normal recurring nature) necessary to present fairly our financial position and the results of our operations. The results of operations for the nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for the year ending December 31, 2010.

Our reportable segments reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States facilities services segment due to changes in our internal reporting structure.

NOTE B New Accounting Pronouncements

On January 1, 2010, we adopted the accounting pronouncement regarding the consolidation of variable interest entities, which changes the consolidation guidance related to a variable interest entity (“VIE”). It also amends the guidance governing the determination of whether or not an enterprise is the primary beneficiary of a VIE and, if so, is therefore required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis includes, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb the losses or the right to receive the benefits of the VIE that could potentially be significant to the VIE. This statement also requires periodic reassessments of whether an enterprise is the primary beneficiary of a VIE. We were previously required to reconsider whether an enterprise is the primary beneficiary of a VIE only when specific events had occurred. This pronouncement also requires enhanced disclosures about an enterprise’s involvement with a VIE. The adoption of this pronouncement did not have any effect on our consolidated financial statements.

In October 2009, an accounting pronouncement was issued to update existing guidance on revenue recognition for arrangements with multiple deliverables. This guidance eliminates the requirement that all undelivered elements must have objective and reliable evidence of fair value before a company can recognize the portion of the consideration attributed to the delivered item. This may allow some companies to recognize revenue on transactions that involve multiple deliverables earlier than under current requirements. Additional disclosures discussing the nature of multiple element arrangements, the types of deliverables under the arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices are required. This pronouncement is effective prospectively for revenue arrangements entered into or modified after annual periods beginning on or after June 15, 2010, but early adoption is permitted. We have not determined the effect, if any, that the adoption of the pronouncement may have on our financial position and/or results of operations.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE C Acquisitions of Businesses

On February 8, 2010 and March 2, 2009, we acquired two companies, each for an immaterial amount. These companies provide mobile mechanical services and have been included in our United States facilities services reporting segment. We believe these acquisitions further our goal of service and geographical diversification and/or expansion of our facilities services operations.

During the third quarter of 2010, we finalized the purchase price allocation and the valuation of the identifiable intangible assets of the company acquired in 2010, resulting in an immaterial adjustment to the value of the related goodwill and identifiable intangible assets. The two acquired companies referred to in the immediately preceding paragraph were accounted for by the acquisition method, and the prices paid for them have been allocated to their respective assets and liabilities, based upon the estimated fair values of their respective assets and liabilities at the dates of their respective acquisitions.

NOTE D Earnings Per Share

Calculation of Basic and Diluted (Loss) Earnings per Common Share

The following table summarizes our calculation of Basic and Diluted (Loss) Earnings per Common Share (“EPS”) for the three and nine months ended September 30, 2010 and 2009 (in thousands, except share and per share data):

		For the
		three months ended
		September 30,
		2010				2009
Numerator:
Net (loss) income attributable to EMCOR Group, Inc. available to common stockholders		$	(175,625	)		$	39,986
Denominator:
Weighted average shares outstanding used to compute basic (loss) earnings per common share			66,400,105				65,897,546
Effect of diluted securities — Share-based awards			—				1,654,073
Shares used to compute diluted (loss) earnings per common share			66,400,105				67,551,619
Basic (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. available to common stockholders		$	(2.64	)		$	0.61
Diluted (loss) earnings per share:
Net (loss) income attributable to EMCOR Group, Inc. available to common stockholders		$	(2.64	)		$	0.59

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE D Earnings Per Share — (continued)

		For the
		nine months ended
		September 30,
		2010				2009
Numerator:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(126,667	)		$	121,573
Denominator:
Weighted average shares outstanding used to compute basic (loss) earnings per common share			66,344,180				65,864,793
Effect of diluted securities — Share-based awards			—				1,414,302
Shares used to compute diluted (loss) earnings per common share			66,344,180				67,279,095
Basic (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(1.91	)		$	1.85
Diluted (loss) earnings per common share:
Net (loss) income attributable to EMCOR Group, Inc. common stockholders		$	(1.91	)		$	1.81

The effect of 1,605,848 and 1,614,979 of common stock equivalents has been excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2010, respectively, due to our net loss position in these periods. Assuming dilution, there were 471,347 and 311,347 anti-dilutive stock options excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2010, respectively. There were 295,624 and 516,386 anti-dilutive stock options that were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2009, respectively.

NOTE E Inventories

Inventories consist of the following amounts (in thousands):

		September 30,				December 31,
		2010				2009
Raw materials and construction materials		$	16,740			$	16,735
Work in process			11,049				17,733
		$	27,789			$	34,468

NOTE F Investments, Notes and Other Long-Term Receivables

On January 8, 2010, a venture in which one of our subsidiaries had a 40% interest and which designs, constructs, owns, operates, leases and maintains facilities to produce chilled water for sale to customers for use in air conditioning commercial properties was sold to a third party. As a result of this sale, we received $17.7 million for our 40% interest and recognized a pretax gain of $4.5 million, which gain is included in our United States facilities services segment and classified as a component of “Cost of sales” on the Condensed Consolidated Statements of Operations.

On June 7, 2010, we sold our equity interest in a Middle East venture, which performed facilities services, to our partner in the venture. As a result of this sale, we received $7.9 million and recognized a pretax gain in this amount, which is classified as a “Gain on sale of equity investment” on the Condensed Consolidated Statements of Operations.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE G Goodwill and Long-Lived Assets

During the third quarter of 2010 and prior to our October 1 annual impairment test, we concluded that impairment indicators existed within the United States facilities services segment based upon its year to date results and recent forecasts. As a result of that conclusion, we performed a step one test as prescribed under Accounting Standard Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other” for that particular reporting unit which concluded that impairment indicators existed within that reporting unit due to significant declines in year to date revenues and operating margins which caused us to revise our expectations for the strength of a near term recovery in our financial models for businesses within that reporting unit. Specifically, we reduced our net sales growth rates and operating margins within our discounted cash flow model, as well as our terminal value growth rates. In addition, we estimated a higher participant risk adjusted weighted average cost of capital. Therefore, the required second step of the assessment for the reporting unit was performed in which the implied fair value of that reporting unit’s goodwill was compared to the book value of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, that is, the estimated fair value of the reporting unit is allocated to all of those assets and liabilities of that unit (including both recognized and unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the estimated fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of that reporting unit’s goodwill, an impairment loss is recognized in the amount of the excess and is charged to operations. We determined the fair value of the reporting unit using discounted estimated future cash flows.

As a result of our impairment assessment, we recognized a $210.6 million non-cash goodwill impairment charge. In addition, at this interim date and prior to our goodwill testing, we also reviewed the carrying value of the other identifiable intangible assets to determine whether they were also impaired. As a result of this assessment, we recorded an additional $15.6 million non-cash impairment charge due to a change in the fair value of various trade names, which are not being amortized, associated with certain prior year acquisitions for the three months ended September 30, 2010. A deferred tax benefit of $19.6 million was recognized during the three months ended September 30, 2010 as a result of the total amount of impairment charges. Additionally, during the second quarter of 2010, we recorded an additional $19.9 million non-cash impairment charge associated with the fair value of various trade names. A deferred tax benefit of $8.0 million was recognized during the three months ended June 30, 2010 as a result of this impairment charge. The goodwill and trade names referred to above are reported within our United States facilities services segment. The impairment primarily results from both lower forecasted revenues from and operating margins at our United States facilities services segment, which has been adversely affected by industry conditions, primarily within the oil and petrochemical markets. We test for the impairment of trade names that are not subject to amortization by calculating the fair value using the “relief from royalty payments” methodology, which involves estimating royalty rates for each trade name and applying these rates to a net revenue stream, which is discounted to determine fair value. For the year ended December 31, 2009, no impairment of goodwill was recognized. These impairments did not have any impact on our compliance with our debt covenants or on our cash flows.

These impairments fall within Level 3 of the fair value hierarchy (see Note J “Fair Value Measurements” for further discussion), due to the use of significant unobservable inputs to determine fair value. The fair value measurements were calculated using unobservable inputs, primarily using the income approach, specifically the discounted cash flow method. The amount and timing of future cash flows within our analysis was based on our most recent operations forecasts, long range strategic plans and other estimates.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE G Goodwill and Long-Lived Assets — (continued)

The changes in the carrying amount of goodwill by reportable segments were as follows (in thousands):

		United States				United States
		electrical				mechanical
		construction				construction				United States
		and facilities				and facilities				facilities
		services segment				services segment				services segment				Total
Balance at January 1, 2010		$	3,823			$	177,740			$	412,065			$	593,628
Acquisitions and purchase price adjustments			—				—				5,647				5,647
Transfers			—				(2,565	)			2,565				—
Impairments			—				—				(210,602	)			(210,602	)
Balance at September 30, 2010		$	3,823			$	175,175			$	209,675			$	388,673

Identifiable intangible assets consist of the following (in thousands):

		September 30, 2010												December 31, 2009
		Gross												Gross
		Carrying				Accumulated								Carrying				Accumulated
		Amount				Amortization				Total				Amount				Amortization				Total
Contract backlog		$	35,405			$	(34,397	)		$	1,008			$	34,505			$	(33,294	)		$	1,211
Developed technology			91,000				(13,840	)			77,160				91,000				(10,427	)			80,573
Customer relationships			119,550				(29,595	)			89,955				115,655				(24,021	)			91,634
Non-competition agreements			7,283				(6,398	)			885				7,243				(5,004	)			2,239
Trade names (unamortized)			54,987				—				54,987				88,865				—				88,865
Total		$	308,225			$	(84,230	)		$	223,995			$	337,268			$	(72,746	)		$	264,522

Amortization expense related to identifiable intangible assets was $3.8 million and $11.5 million for the three and nine months ended September 30, 2010, respectively.

NOTE H Debt

Debt in the accompanying Condensed Consolidated Balance Sheets consisted of the following amounts (in thousands):

		September 30,				December 31,
		2010				2009
2010 Revolving Credit Facility		$	150,000			$	—
Term Loan			—				194,750
Capitalized lease obligations			329				601
Other			29				—
			150,358				195,351
Less: current maturities			305				45,100
		$	150,053			$	150,251

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE H Debt — (continued)

Until February 4, 2010, we had a revolving credit agreement (the “Old Revolving Credit Facility”) as amended, which provided for a credit facility of $375.0 million. Effective February 4, 2010, we replaced the Old Revolving Credit Facility that was due to expire October 17, 2010 with an amended and restated $550.0 million revolving credit facility (the “2010 Revolving Credit Facility”). The 2010 Revolving Credit Facility expires in February 2013. It permits us to increase our borrowing to $650.0 million if additional lenders are identified and/or existing lenders are willing to increase their current commitments. We may allocate up to $175.0 million of the borrowing capacity under the 2010 Revolving Credit Facility to letters of credit, which amount compares to $125.0 million under the Old Revolving Credit Facility. The 2010 Revolving Credit Facility is guaranteed by certain of our direct and indirect subsidiaries and is secured by substantially all of our assets and most of the assets of most of our subsidiaries. The 2010 Revolving Credit Facility contains various covenants requiring, among other things, maintenance of certain financial ratios and certain restrictions with respect to payment of dividends, common stock repurchases, investments, acquisitions, indebtedness and capital expenditures. A commitment fee is payable on the average daily unused amount of the 2010 Revolving Credit Facility. The fee is 0.5% of the unused amount, based on certain financial tests. Borrowings under the 2010 Revolving Credit Facility bear interest at (1) a rate which is the prime commercial lending rate announced by Bank of Montreal from time to time (3.25% at September 30, 2010) plus 1.75% to 2.25%, based on certain financial tests or (2) United States dollar LIBOR (0.26% at September 30, 2010) plus 2.75% to 3.25%, based on certain financial tests. The interest rate in effect at September 30, 2010 was 3.01%. Letter of credit fees issued under this facility range from 2.75% to 3.25% of the respective face amounts of the letters of credit issued and are charged based on certain financial tests. We capitalized approximately $6.0 million of debt issuance costs associated with the 2010 Revolving Credit Facility. This amount is being amortized over the life of the facility and is included as part of interest expense. In connection with the termination of the Old Revolving Credit Facility, less than $0.1 million attributable to the acceleration of expense for debt issuance costs was recorded as part of interest expense. As of September 30, 2010 and December 31, 2009, we had approximately $77.5 million and $68.9 million of letters of credit outstanding, respectively. There were no borrowings under the Old Revolving Credit Facility as of December 31, 2009. We have borrowings of $150.0 million outstanding under the 2010 Revolving Credit Facility at September 30, 2010, which may remain outstanding at our discretion until the 2010 Revolving Credit Facility expires. On September 19, 2007, we entered into an agreement providing for a $300.0 million term loan (“Term Loan”). The proceeds of the Term Loan were used to pay a portion of the consideration for an acquisition and costs and expenses incident thereto. In connection with the closing of the 2010 Revolving Credit Facility, we proceeded to borrow $150.0 million under this facility and used the proceeds along with cash on hand to prepay on February 4, 2010 all indebtedness outstanding under the Term Loan. In connection with this prepayment, $0.6 million attributable to the acceleration of expense for debt issuance costs associated with the Term Loan was recorded as part of interest expense.

NOTE I Derivative Instrument and Hedging Activity

On January 27, 2009, we entered into an interest rate swap agreement (the “Swap Agreement”), which hedges the interest rate risk on our variable rate debt. The Swap Agreement, which has a notional amount of $192.5 million, is used to manage the variable interest rate of our borrowings and related overall cost of borrowing. We mitigate the risk of counterparty nonperformance by choosing as our counterparty a major reputable financial institution with an investment grade credit rating.

The derivative is recognized as either an asset or liability on our Condensed Consolidated Balance Sheets with measurement at fair value, and changes in the fair value of the derivative instrument reported in either net income, included as part of interest expense, or other comprehensive income depending on the designated use of the derivative and whether or not it meets the criteria for hedge accounting. The fair value of this instrument reflects the net amount required to settle the position. The accounting for gains and losses associated with changes in fair value of the derivative and the related effects on the condensed consolidated financial statements is subject to their hedge designation and whether they meet effectiveness standards.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE I Derivative Instrument and Hedging Activity — (continued)

The Swap Agreement matures in October 2010. We pay a fixed rate of 2.225% and receive a floating rate of 30 day LIBOR on the notional amount. A portion of the interest rate swap has been designated as an effective cash flow hedge, whereby changes in the cash flows from the swap perfectly offset the changes in the cash flows associated with the floating rate of interest (see Note H, “Debt”). The fair value of the interest rate swap at September 30, 2010 was a net liability of $0.1 million. This liability reflects the interest rate swap’s termination value as the credit value adjustment for counterparty nonperformance is immaterial. We have no obligation to post any collateral related to this derivative. The fair value of the interest rate swap is based upon the valuation technique known as the market standard methodology of netting the discounted future fixed cash flows and the discounted expected variable cash flows. The variable cash flows are based on an expectation of future interest rates (forward curves) derived from observable interest rate curves. In addition, we have incorporated a credit valuation adjustment into our calculation of fair value of the interest rate swap. This adjustment recognizes both our nonperformance risk and the counterparty’s nonperformance risk. The net liability was included in “Other accrued expenses and liabilities” on our Condensed Consolidated Balance Sheet. Accumulated other comprehensive loss at September 30, 2010 included the accumulated loss, net of income taxes, on the cash flow hedge, of $0.04 million. For the three and nine months ended September 30, 2010, we recognized $0.02 million and $0.2 million, respectively, of income associated with the ineffective portion of the interest rate swap as part of interest expense.

We have an agreement with our derivative counterparty that contains a provision that if we default on certain of our indebtedness, we could also be declared in default on our derivative obligation.

NOTE J Fair Value Measurements

We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, which gives the highest priority to quoted prices in active markets, is comprised of the following three levels:

Level 1 — Unadjusted quoted market prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs, other than Level 1 inputs. Level 2 inputs would typically include quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 — Prices or valuations that require inputs that are both significant to the measurement and unobservable.

We measure the fair value of our derivative instrument on a recurring basis. At September 30, 2010, the $0.1 million fair value of the interest rate swap was determined using Level 2 inputs.

We believe that the carrying values of our financial instruments, which include accounts receivable and other financing commitments, approximate their fair values due primarily to their short-term maturities and low risk of counterparty default. The carrying value of our borrowings under the 2010 Revolving Credit Facility approximates the fair value due to the variable rate on such debt.

At September 30, 2010 and December 31, 2009, we had certain assets, specifically $239.7 million and $60.6 million, respectively, of goodwill and/or indefinite lived intangible assets, which were accounted for at fair market value on a non-recurring basis. We have determined that the fair value measurements of these non-financial assets are Level 3 in the fair value hierarchy.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE K Income Taxes

For the three months ended September 30, 2010 and 2009, our income tax (benefit) provision was $(2.4) million and $25.6 million, respectively, based on effective income tax rates, before discrete items and the tax effect of non-cash impairment charges, of 37.3% and 38.1%, respectively. The actual income tax rates for the three months ended September 30, 2010 and 2009, inclusive of discrete items and the tax effect of non-cash impairment charges, were (1.3)% and 39.1%, respectively. For the nine months ended September 30, 2010 and 2009, our income tax provisions were $27.1 million and $81.1 million, respectively, based on effective income tax rates, before discrete items and the tax effect of non-cash impairment charges, of 36.9% and 38.7%, respectively. The actual income tax rates for the nine months ended September 30, 2010 and 2009, inclusive of discrete items and the tax effect of non-cash impairment charges, were 27.2% and 40.0%, respectively. The decrease in the 2010 income tax provision for both periods was primarily due to reduced income before income taxes and a change in the allocation of earnings among various jurisdictions. The 2010 effective income tax rates were impacted by the non-cash impairment charge related to goodwill, as substantially all of the charges are not separately deductible for tax purposes.

As of September 30, 2010 and December 31, 2009, the amount of unrecognized income tax benefits for each period was $6.5 million and $7.5 million, respectively (of which $4.4 million and $5.4 million, if recognized, would favorably affect our effective income tax rate).

We recognized interest expense related to unrecognized income tax benefits in the income tax provision. As of both September 30, 2010 and December 31, 2009, we had approximately $2.2 million of accrued interest related to unrecognized income tax benefits included as a liability on the Condensed Consolidated Balance Sheets. For the three months ended September 30, 2010 and 2009, $0.2 million and $1.8 million of interest expense was reversed, respectively. For the nine months ended September 30, 2010 and 2009, $0.1 million of interest expense was recognized and $1.5 million of interest expense was reversed, respectively.

It is possible that approximately $4.6 million of unrecognized income tax benefits at September 30, 2010, primarily relating to uncertain tax positions attributable to certain intercompany transactions and compensation related accruals, will become recognized income tax benefits in the next twelve months due to the expiration of applicable statutes of limitations.

We file income tax returns with the Internal Revenue Service and various state, local and foreign jurisdictions. The Company is currently under examination by the State of Connecticut for the years 2004 through 2007. The Internal Revenue Service has completed its audit of our federal income tax returns for the years 2005 through 2007. We agreed to and paid an assessment proposed by the Internal Revenue Service pursuant to such audit. We recorded a charge of approximately $2.0 million, inclusive of interest, as a result of this audit in the first quarter of 2009, which is reflected in the results for the nine months ended September 30, 2009.

NOTE L Common Stock

As of September 30, 2010 and December 31, 2009, 66,439,796 and 66,187,344 shares of our common stock were outstanding, respectively.

For the three months ended September 30, 2010 and 2009, 82,708 and 42,700 shares of common stock, respectively, were issued upon the exercise of stock options. For the nine months ended September 30, 2010 and 2009, 219,049 and 429,767 shares of common stock, respectively, were issued upon the exercise of stock options, upon the satisfaction of required conditions under certain of our share-based compensation plans and upon the grants of shares of common stock.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE M Retirement Plans

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”); however, no individual joining the company after October 31, 2001 may participate in the plan. On May 31, 2010, we curtailed the future accrual of benefits for active employees under this plan. As a result of this curtailment, we recognized a reduction of the projected benefit obligation and recorded a curtailment gain of $6.4 million, which will be amortized in the future through net periodic pension cost. This defined benefit pension plan was replaced by a defined contribution plan. In addition, as a result of the curtailment and the significant one-time contribution made to the plan discussed below, we have recomputed our 2010 net periodic pension cost for the remainder of 2010.

The weighted-average assumptions used to determine benefit obligations as of May 31, 2010 and December 31, 2009 were as follows:

		May 31, 2010				December 31, 2009
Discount rate			5.6	%			5.7	%
Annual rate of return on plan assets			6.9	%			7.1	%

Components of Net Periodic Pension Benefit Cost

The components of net periodic pension benefit cost of the UK Plan for the three and nine months ended September 30, 2010 and 2009 were as follows (in thousands):

		For the three months ended								For the nine months ended
		September 30,								September 30,
		2010				2009				2010				2009
Service cost		$	—			$	825			$	1,445			$	2,331
Interest cost			3,290				3,138				10,044				8,859
Expected return on plan assets			(3,145	)			(2,552	)			(9,040	)			(7,205	)
Amortization of unrecognized loss			375				1,109				2,518				3,128
Net periodic pension benefit cost		$	520			$	2,520			$	4,967			$	7,113

Employer Contributions

For the nine months ended September 30, 2010, our United Kingdom subsidiary contributed $31.4 million to its defined benefit pension plan, which included a one-time contribution of $25.9 million. It anticipates contributing an additional $1.4 million during the remainder of 2010.

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE N Segment Information

Our reportable segments reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States facilities services segment due to changes in our internal reporting structure.

We have the following reportable segments which provide services associated with the design, integration, installation, start-up, operation and maintenance of various systems: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; low-voltage systems, such as fire alarm, security and process control; voice and data communication; roadway and transit lighting; and fiber optic lines); (b) United States mechanical construction and facilities services (involving systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; fire protection; plumbing, process and high-purity piping; water and wastewater treatment and central plant heating and cooling); (c) United States facilities services; (d) Canada construction; (e) United Kingdom construction and facilities services; and (f) Other international construction and facilities services. The segment “United States facilities services” principally consists of those operations which provide a portfolio of services needed to support the operation and maintenance of customers’ facilities (industrial maintenance and services; outage services to utilities and industrial plants; commercial and government site-based operations and maintenance; military base operations support services; mobile maintenance and services; facilities management; installation and support for building systems; technical consulting and diagnostic services; small modification and retrofit projects; retrofit projects to comply with clean air laws; and program development, management and maintenance for energy systems), which services are not generally related to customers’ construction programs, as well as industrial services operations, which primarily provide aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for refineries and the petrochemical industry. The Canada construction segment performs electrical construction and mechanical construction. The United Kingdom and Other international construction and facilities services segments perform electrical construction, mechanical construction and facilities services. Our “Other international construction and facilities services” segment, consisted of our equity interest in a Middle East venture, which interest we sold on June 7, 2010. The following tables present information about industry segments and geographic areas for the three and nine months ended September 30, 2010 and 2009 (in thousands):

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE N Segment Information — (continued)

		For the three months ended
		September 30,
		2010				2009
Revenues from unrelated entities:
United States electrical construction and facilities services		$	301,183			$	309,820
United States mechanical construction and facilities services			431,485				472,498
United States facilities services			375,011				371,553
Total United States operations			1,107,679				1,153,871
Canada construction			57,194				80,986
United Kingdom construction and facilities services			112,404				137,128
Other international construction and facilities services			—				—
Total worldwide operations		$	1,277,277			$	1,371,985
Total revenues:
United States electrical construction and facilities services		$	304,436			$	312,226
United States mechanical construction and facilities services			433,487				477,829
United States facilities services			380,991				376,283
Less intersegment revenues			(11,235	)			(12,467	)
Total United States operations			1,107,679				1,153,871
Canada construction			57,194				80,986
United Kingdom construction and facilities services			112,404				137,128
Other international construction and facilities services			—				—
Total worldwide operations		$	1,277,277			$	1,371,985

		For the nine months ended
		September 30,
		2010				2009
Revenues from unrelated entities:
United States electrical construction and facilities services		$	848,136			$	956,362
United States mechanical construction and facilities services			1,271,237				1,495,711
United States facilities services			1,097,303				1,132,391
Total United States operations			3,216,676				3,584,464
Canada construction			213,920				231,203
United Kingdom construction and facilities services			334,542				373,624
Other international construction and facilities services			—				—
Total worldwide operations		$	3,765,138			$	4,189,291
Total revenues:
United States electrical construction and facilities services		$	854,918			$	962,487
United States mechanical construction and facilities services			1,276,407				1,509,162
United States facilities services			1,112,683				1,144,642
Less intersegment revenues			(27,332	)			(31,827	)
Total United States operations			3,216,676				3,584,464
Canada construction			213,920				231,203
United Kingdom construction and facilities services			334,542				373,624
Other international construction and facilities services			—				—
Total worldwide operations		$	3,765,138			$	4,189,291

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE N Segment Information — (continued)

		For the three months ended
		September 30,
		2010				2009
Operating (loss) income:
United States electrical construction and facilities services		$	25,435			$	26,266
United States mechanical construction and facilities services			27,845				32,022
United States facilities services			13,272				15,481
Total United States operations			66,552				73,769
Canada construction			(4,648	)			4,537
United Kingdom construction and facilities services			1,753				4,000
Other international construction and facilities services			—				(40	)
Corporate administration			(10,179	)			(14,916	)
Restructuring expenses			(1,715	)			(90	)
Impairment loss on goodwill and identifiable intangible assets			(226,152	)			—
Total worldwide operations			(174,389	)			67,260
Other corporate items:
Interest expense			(3,179	)			(1,947	)
Interest income			642				788
Gain on sale of equity investment			—				—
(Loss) income before income taxes		$	(176,926	)		$	66,101

		For the nine months ended
		September 30,
		2010				2009
Operating (loss) income:
United States electrical construction and facilities services		$	51,844			$	83,939
United States mechanical construction and facilities services			76,796				84,361
United States facilities services			46,993				61,618
Total United States operations			175,633				229,918
Canada construction			2,357				13,396
United Kingdom construction and facilities services			11,121				9,744
Other international construction and facilities services			(99	)			(40	)
Corporate administration			(37,541	)			(42,394	)
Restructuring expenses			(2,512	)			(4,200	)
Impairment loss on goodwill and identifiable intangible assets			(246,081	)			—
Total worldwide operations			(97,122	)			206,424
Other corporate items:
Interest expense			(9,355	)			(5,640	)
Interest income			2,054				3,416
Gain on sale of equity investment			7,900				—
(Loss) income before income taxes		$	(96,523	)		$	204,200

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE N Segment Information — (continued)

		September 30,				December 31,
		2010				2009
Total assets:
United States electrical construction and facilities services		$	302,398			$	294,403
United States mechanical construction and facilities services			580,275				618,621
United States facilities services			789,468				1,017,550
Total United States operations			1,672,141				1,930,574
Canada construction			107,107				114,717
United Kingdom construction and facilities services			185,541				224,816
Other international construction and facilities services			—				—
Corporate administration			662,715				711,787
Total worldwide operations		$	2,627,504			$	2,981,894

NOTE O Subsequent Events

On October 8, 2010, we acquired a company for an immaterial amount. This company primarily performs government infrastructure contracting services and will be included in our United States facilities services reporting segment. The purchase price of this acquisition is subject to finalization based on certain contingencies provided for in the purchase agreement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are one of the largest electrical and mechanical construction and facilities services firms in the United States, Canada, the United Kingdom and in the world. We provide services to a broad range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. Our offices are located in the United States, Canada and the United Kingdom. In the Middle East, we previously carried on business through a venture, which we sold on June 7, 2010.

Overview

The following table presents selected financial data for the three months ended September 30, 2010 and 2009 (in thousands, except percentages and per share data):

		For the three months ended
		September 30,
		2010				2009
Revenues		$	1,277,277			$	1,371,985
Revenues decrease from prior year			(6.9	)%			(20.2	)%
Impairment loss on goodwill and identifiable intangible assets		$	226,152			$	—
Operating (loss) income		$	(174,389	)		$	67,260
Operating (loss) income as a percentage of revenues			(13.7	)%			4.9	%
Net (loss) income attributable to EMCOR Group, Inc.		$	(175,625	)		$	39,986
Diluted (loss) earnings per common share		$	(2.64	)		$	0.59

The results of our operations for the third quarter of 2010 reflect the continued uncertainty in the economy, in particular the private nonresidential building and refinery markets. Due to this continued uncertainty during our normal forecast cycle and based upon the results of our operations, we have tempered our expectations in our financial models regarding the strength of a near term recovery in our United States facilities services segment resulting in the recording of a non-cash impairment charge of $226.2 million. This non-cash impairment charge was comprised of $210.6 million for goodwill and $15.6 million for certain of our trade names. In addition, we also experienced overall lower revenues and operating results compared to the year ago quarter. The decrease in revenues for the 2010 third quarter, when compared to the prior year’s third quarter, was primarily attributable to: (a) a decline in work performed on domestic industrial, commercial and hospitality construction projects, generally as a result of the economic slowdown, and our decision to only accept work that we believe can be performed at reasonable margins, (b) a decline in revenues from our international operations and (c) a decline in organic revenues arising from our United States facilities services segment due to the economic slowdown. During the third quarter of 2010, a company we acquired earlier this year, which is reported in our United States facilities services segment, contributed $12.9 million to revenues and $0.4 million to operating income (net of $0.2 million of amortization expense attributable to identifiable intangible assets included in cost of sales and selling, general and administrative expenses). The decrease in operating income and operating margin (operating income as a percentage of revenues) was primarily a result of: (a) the non-cash impairment charge discussed above, (b) an operating loss from a significant project write-down at our Canadian operations and (c) lower operating income of our United States mechanical construction and facilities services segment. This decrease in operating income was partially offset by reduced selling, general and administrative expenses primarily as result of lower incentive compensation accruals. During the first nine months of 2010, cash was used in operating activities (as compared to the first nine months of 2009 during which cash was provided by operating activities) primarily due to lower operating results and changes in our working capital, including a reduction in accruals for payroll and benefits resulting from the payment of incentive compensation and a one-time contribution of $25.9 million to the United Kingdom defined benefit pension plan.

We completed one acquisition during the first nine months of 2010 for an immaterial amount. The results of the acquired company, which provides mobile mechanical services, have been included in our United States facilities services segment; the acquired company expands our service capabilities into a new geographical area. The acquisition is not material to our results of operations for the periods presented.

Operating Segments

Our reportable segments reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States facilities services segment due to changes in our internal reporting structure.

We have the following reportable segments which provide services associated with the design, integration, installation, start-up, operation and maintenance of various systems: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; low-voltage systems, such as fire alarm, security and process control; voice and data communication; roadway and transit lighting; and fiber optic lines); (b) United States mechanical construction and facilities services (involving systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; fire protection; plumbing, process and high-purity piping; water and wastewater treatment and central plant heating and cooling); (c) United States facilities services; (d) Canada construction; (e) United Kingdom construction and facilities services; and (f) Other international construction and facilities services. The segment “United States facilities services” principally consists of those operations which provide a portfolio of services needed to support the operation and maintenance of customers’ facilities (industrial maintenance and services; outage services to utilities and industrial plants; commercial and government site-based operations and maintenance; military base operations support services; mobile maintenance and services; facilities management; installation and support for building systems; technical consulting and diagnostic services; small modification and retrofit projects; retrofit projects to comply with clean air laws; and program development, management and maintenance for energy systems), which services are not generally related to customers’ construction programs, as well as industrial services operations, which primarily provide aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for refineries and the petrochemical industry. The Canada construction segment performs electrical construction and mechanical construction. The United Kingdom and Other international construction and facilities services segments perform electrical construction, mechanical construction and facilities services. Our “Other international construction and facilities services” segment consisted of our equity interest in a Middle East venture, which interest we sold on June 7, 2010.

Results of Operations

Revenues

The following tables present our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):

		For the three months ended September 30,
						% of								% of
		2010				Total				2009				Total
Revenues:
United States electrical construction and facilities services		$	301,183				24	%		$	309,820				23	%
United States mechanical construction and facilities services			431,485				34	%			472,498				34	%
United States facilities services			375,011				29	%			371,553				27	%
Total United States operations			1,107,679				87	%			1,153,871				84	%
Canada construction			57,194				4	%			80,986				6	%
United Kingdom construction and facilities services			112,404				9	%			137,128				10	%
Other international construction and facilities services			—				—				—				—
Total worldwide operations		$	1,277,277				100	%		$	1,371,985				100	%

		For the nine months ended September 30,
						% of								% of
		2010				Total				2009				Total
Revenues:
United States electrical construction and facilities services		$	848,136				23	%		$	956,362				23	%
United States mechanical construction and facilities services			1,271,237				34	%			1,495,711				36	%
United States facilities services			1,097,303				29	%			1,132,391				27	%
Total United States operations			3,216,676				85	%			3,584,464				86	%
Canada construction			213,920				6	%			231,203				6	%
United Kingdom construction and facilities services			334,542				9	%			373,624				9	%
Other international construction and facilities services			—				—				—				—
Total worldwide operations		$	3,765,138				100	%		$	4,189,291				100	%