EMCOR applies APB 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized in the accompanying Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997 for options granted during those years. Had compensation cost for these plans 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):

Warrants 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 November and December 1999, 600,603 Series X and 141,944 Series Y Warrants were exercised, respectively. All unexercised Series X and Series Y Warrants expired on December 15, 1999.

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, 1999 and 1998 consists of the following components (in thousands):