Notes to Consolidated Financial Statements Note J –  Retirement Plans 35 EMCOR, 2000 Annual Report On December 15, 1994, EMCOR issued to the holders of $7,040,000 principal amount of its pre-bankruptcy petition 7.75% Convertible Subordinated Debentures and $9,600,000 principal amounts of its pre-bankruptcy petition 12.0% Subordinated Notes, their pro rata share of each of two series of five-year Warrants to purchase shares of Common Stock, namely Series X Warrants  and Series Y Warrants, with an exercise price of $12.55 per share and $17.55 per share, respectively. In addition, approximately 28,000 Series X Warrants and 28,000 Series Y Warrants, were  issued to Belmont Capital Partners II, L. P. as a portion of additional interest under a debtor-in-possession credit facility. During 1999, 600,603 Series X and 141,944 Series Y Warrants were  exercised. All unexercised Series X and Series Y Warrants expired  on December 15, 1999. Warrants EMCOR applies APB 25 and related interpretations in accounting for its stock options. Accordingly, no compensation  cost has been recognized in the accompanying Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998 for stock options granted during those years. Had compensation cost for these options been determined consistent with SFAS 123, EMCOR’s net income, Basic EPS and Diluted  EPS would have been reduced from the following as reported  amounts to the following pro forma amounts (in thousands, except per share amounts): EMCOR’s United Kingdom subsidiary has a defined benefit  pension plan covering substantially all eligible employees. The  benefits under the plan are based on wages and years of service with the subsidiary. EMCOR’s policy is to fund the  minimum amount required by law. The change in benefit obligation and plan assets for the years ended December 31, 2000 and 1999 consisted of the following components (in thousands): 2000 1999 1998 Net income: As reported $ 40,089 $ 27,821 $ 12,315 Pro forma $ 37,204 $ 25,597 $ 10,176 Basic EPS: As reported $ 3.84 $ 2.86 $ 1.20 Pro forma $ 3.56 $ 2.63 $ 0.99 Diluted EPS As reported $ 2.95 $ 2.21 $ 1.11 Pro forma $ 2.76 $ 2.06 $ 0.75 2000 1999 Change in pension benefit  obligation: Benefit obligation at beginning of year $ 97,217 $ 87,574 Service cost 6,028 6,285 Interest cost 5,553 5,243 Changes in actuarial assumptions 4,276 3,965 Benefits paid (4,209) (2,881) Foreign currency exchange rate changes (7,377) (2,969) Benefit obligation at end of year $ 101,488 $ 97,217 Change in pension plan assets: Fair value of plan assets at beginning of year $ 101,247 $ 82,428 Actual return on plan assets (1,359) 17,810 Employer contributions 5,357 4,529 Plan participants’ contributions 2,529 2,155 Benefits paid (4,209) (2,881) Foreign currency exchange rate changes (7,683) (2,794) Fair values of plan assets at end of year $ 95,882 $ 101,247 Funded status $ (5,606) $ 4,030 Unrecognized transition amount (278) (383) Unrecognized prior service cost 409 518 Unrecognized losses/(gains) 4,433 (6,338) Net amount recognized $ (1,042) $ (2,173) Amounts recognized in  the Consolidated Financial  Statements: Employer contributions $ 5,357 $ 4,529 Net periodic pension  benefit cost (4,391) (5,408) Accrued pension cost brought forward (2,173) (1,340) Foreign currency exchange rate changes 165 46 Net amount recognized as  accrued pension liability $ (1,042) $ ( 2,173)